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Flowers v Persist Oil and Gas Inc., 2024 ABLPRT 271 (CanLII)

Date:
2024-05-31
File number:
RE2022.0022; SL2022.0350
Citation:
Flowers v Persist Oil and Gas Inc., 2024 ABLPRT 271 (CanLII), <https://canlii.ca/t/k536q>, retrieved on 2025-04-14
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LAND AND PROPERTY RIGHTS TRIBUNAL

 

Citation:

Flowers v Persist Oil and Gas Inc., 2024 ABLPRT 271

 

 

Date: 

2024-05-31

File No.

SL2022.0350 and RE2022.0022

Decision No.

LPRT2024/SR0271

Municipality:

Rocky View County

In the matter of a proceeding commenced under section 27 of the Surface Rights Act, RSA 2000,

c S-24 (the “Act”)

And in the matter of land in the Province of Alberta within the:

SE 1/4 -16-26-5-W5M as described in Certificate of Title No. 121 047 812 (the “Land”)

particularly the area granted for Alberta Energy Regulator (“AER”) Well Licence No. F3655 (the “Site”).

 

Between:

 

Roy Daniel Flowers (the “Owner”),

 

Applicant/Respondent,

 

 

 

 

- and -

 

 

 

Persist Oil and Gas Inc. (the “Operator”)

 

Respondent/Applicant,

 

- and -

 

 

Pieridae Alberta Production Ltd.,

The Alberta Gas Trunk Line Co. Ltd.,

Inter Pipeline Extraction Ltd.,

Pembina NGL Corporation,

Persist Oil and Gas Inc.,

FortisAlberta Inc.,

Amy Jane Flowers,

Nova Gas Transmission Ltd.,

Shell Canada Limited,

and

The Alberta Gas Trunk Line Company Limited,

Respondents.

 

 

 

 

Before:

Glenn Selland, Chair

 

 

Laura Dunham

 

 

Ivan Weleschuk

 

 

(the “Panel”)

 

 

DECISION

 

 

APPEARANCES

 

For the Applicant/ Respondent:

Roy Daniel Flowers

Amy Flowers

For the Operator:

Emily McCartney, Legal Counsel, Gowling WLG (Canada) LLP

Dantae Gagnier, Legal Counsel, Gowling WLG (Canada) LLP

Greg Vavra, VP Land and Legal, Persist Oil and Gas Inc. (Observer)

Mass Geremia, President, Persist Oil & Gas Inc.

Robert Telford, Telford Land & Valuation Inc.

 

[1]               No other Respondents were represented although duly notified of the hearing.

BACKGROUND/OVERVIEW

 

[2]               This decision involves a section 27 compensation review application filed by the Owner for a review of annual compensation payable under a surface lease dated November 12, 1999 (the “Surface Lease”) for the Site (the “Section 27 Application”). It also involves the determination of the amount of compensation payable pursuant to the issuance of a Right of Entry Order (the “ROE”) on April 26th, 2023 by the Tribunal in Decision No. LPRT2023/SR0236 (the “ROE Decision”) granting the Operator access to the same Site (the “Section 23 Proceedings”).

 

[3]               The Operator applied for the ROE as the Owner took the position that the Surface Lease had expired and the Operator did not have legal access to the Site. A reclamation certificate for the Site has not been issued.

 

[4]               The Site is 3.15 acres and is used by the Operator for gas gathering, compression and the processing of liquids. The Operator also conducts Bitcoin mining on the Site which the Owner disputes is a permitted use. The Bitcoin mining dispute is the subject of a concurrent Court of King's Bench application and is not addressed in this decision.

 

[5]               The remainder Land is rented out by the Owner to a third party for a grazing operation.

 

[6]               The parties agreed that the Tribunal would hear the Section 27 Application and the Section 23 Proceedings together as they were with respect to the same Site.

 

[7]               A virtual hearing was held on August 22, 2023. The Owner testified on his own behalf. Mass Geremia, the Operator’s President (“Geremia”), and Robert Telford (“Telford”), of Telford Land & Valuation Inc., testified on behalf of the Operator.

 

[8]               The Panel found it had the jurisdiction under section 27 of the Act to determine the rate of compensation payable under the Surface Lease for the period November 12, 1999 – April 25, 2023. In the absence of a valid reclamation certificate for the Site or a new right of entry instrument, the obligation of the Operator under the expired Surface Lease to pay compensation continues, and the Tribunal has the authority to determine the rate of compensation payable.

 

[9]               The Panel also had the jurisdiction under section 23 of the Act to determine the amount of compensation payable under the ROE. The obligation of the Operator to pay compensation under the Surface Lease continued until the ROE was issued on April 26, 2023, at which point compensation was payable pursuant to a compensation order associated with the ROE.

 

[10]            The Panel awarded compensation for market value of the Site, annual compensation, and interest. The Panel reserved the rights of all parties to return to the Tribunal for a determination of costs related to this matter.

FACTUAL OVERVIEW

 

[11]            The following facts are based on undisputed evidence.

 

[12]            On November 12, 1999, Douglas Chapman (“Chapman”) entered into the Surface Lease with Olympia Energy Inc. (“Olympia”) whereby Olympia agreed to pay Chapman $12,150.00 annual compensation for the Site (the “Surface Lease”).

 

[13]            AER Licence Number F3655 (the “AER Licence”) permits a gas multiwell effluent measurement battery, a compressor station, a gas gathering system and a sweet gas plant on the Site.  As of July 7, 2023, the gas multiwell battery, compressor station and gas gathering system remain active, although the sweet gas plant operations have been suspended.

 

[14]            On November 12, 2009, the term of the Surface Lease was extended for 10 years.

 

[15]            On February 27, 2012, Roy Daniel Flowers became the Owner of the Land and the Lessor of the Surface Lease.

 

[16]            On November 12, 2019, the term of the Surface Lease came to an end. There were negotiations between the new Lessee and Operator, Persist Oil and Gas Inc., and the Owner, but the Surface Lease was not renewed or amended, nor was a new surface lease executed. The Operator continued to pay annual compensation in the amount of $12,150.00 to the Owner for the years 2019, 2020, 2021 and 2022, and the Owner accepted the compensation for the years 2019, 2020 and 2021, but the Owner refused payment for 2022 so that year remains outstanding.

 

[17]            An issue that arose during the negotiations was that the Owner alleged that the Operator was intermittently running a Bitcoin mining operation on the Site, having brought onto the Site in or about April 2021, two 1-megawatt generators, computers and other equipment for the purpose of mining Bitcoin using the natural gas available from the compressor to generate electrical power. The Owner filed a Statement of Claim in the Court of King’s Bench seeking to prevent the Bitcoin operation. At the time of the hearing of this matter, the Court of King’s Bench action was still outstanding.

 

[18]            On September 26, 2022, the Applicant filed the Section 27 Application seeking a compensation review of the $12,150.00 annual compensation payable under the Surface Lease.

 

[19]            On December 20, 2022, the Operator filed an application for the ROE under Section 15 of the Site (the “ROE Application”) because the Owner would not sign a surface lease. A Declaration of Most Recent Written Offer was included with an offer of annual compensation of $3,945.00 for the Site plus a payment of $1,575.00 for the entry fee.

 

[20]            On December 21, 2022, the Tribunal received an objection to the ROE Application from the Owner.

 

[21]            On April 24, 2023, the Alberta Utilities Commission (“AUC”) granted approval to the Operator to construct and operate a 2.295 megawatt natural gas-fired power plant to generate electricity.

 

[22]            On April 26, 2023, a panel of the Tribunal convened to consider the ROE Application. The panel of the Tribunal determined the issues raised did not require an oral hearing and issued the ROE Decision granting the ROE. The issuance of the ROE automatically triggered the Section 23 Proceedings.

 

[23]            On June 27, 2023, the Operator sent a cheque to the Owner in the amount of $5,520.00, representing payment of $1,575.00 for the entry fee and $3,945.00 for initial consideration due under the ROE.

 

RELEVANT LEGISLATION

 

Surface Rights Act, RSA 2000, c S-24, ss. 19, 20, 23, 25, 27

Surface Rights Rules

Environmental Protection and Enhancement Act, RSA 2000, c E-12, s. 144

 

EXHIBITS FILED

 

[24]            The Exhibits are listed in Appendix A.

 

ISSUES

 

1.              Should the Panel consider the Section 27 Application given the Surface Lease had expired on November 12, 2019?

 

2.              If the Panel should consider the Section 27 Application, what is the rate of annual compensation as of the effective date of review?

 

a.     Does the evidence establish a pattern of dealings? If so, is there a cogent reason to depart from the pattern of dealings?

b.   If the evidence does not establish a pattern of dealings, what rate of compensation is supported by the evidence?

c.     Is interest payable, and if so, at what rate and to whom?

 

3.              What amount of compensation is payable under section 23?

 

a.     What amount of compensation, if any, is payable for the taking under section 25(1)(a) or section 25(1)(b) of the Act?
b.   What amount of annual compensation, if any, is payable, for ongoing loss of use, adverse effect, nuisance, inconvenience and noise under sections 25(1)(c) and (d) of the Act?
c.     Has damage to the Land occurred and, if so, what is reasonable compensation under section 25(1)(e) and section 25(5) of the Act?
d.   Are there any other factors that the Tribunal considers proper under the circumstances for compensation under section 25(1)(f) of the Act?                                                                                                                                                              
e.     Is an adjustment necessary from the total award because of the initial payment made by the Operator under section 25(6)?
f.     To whom is compensation payable?
g.   Is interest payable, and if so, at what rate?

 

4.              To whom, and in what amount, if any, should costs be payable?

 

PARTY POSITIONS

 

Owner’s Position

 

[25]            The Owner’s position is that the Surface Lease expired in 2019. Moreover, the Operator has expanded its operations to include Bitcoin mining and is operating on the Site without a valid surface lease. As well, the Operator is not a good tenant because it does not upkeep the access road, it wants to lower the annual compensation despite the increased cost of living, and it has brought in a completely different operation than the Surface Lease contemplates. The Owner seeks a new surface lease at fair market value based on comparables of similar properties sold since 2005.

[26]            Despite taking the position that there is not a valid lease for the Site, the Owner filed the Section 27 Application to review the compensation payable under the Surface Lease.

[27]            The Owner is seeking increases in the annual current compensation rate of $12,150.00 on the basis of the increased cost of living, the increased value of farmland, and the increased noise and activity generated by the Bitcoin mining operation, as follows:

Effective Date                                                Annual Compensation Requested

1999

$12,150.00 (no increase)

2019

$24,300.00

2029

$36,450.00

2039

$50,600.00

 

[28]            The Owner did not take a position with respect to the determination of compensation payable pursuant to the issuance of the ROE.

 

[29]            The Owner initially indicated that he was seeking reimbursement of legal fees incurred to date. However, in the hearing the Owner indicated that he would not seek costs against the Operator based on the Operator’s submissions that it would not seek costs against the Owner if the Owner refrained from seeking costs against the Operator.

Operator’s Position

 

[30]            The Operator’s position is that this matter should be determined as a section 27 compensation review as the Surface Lease continues by operation of statute. Even though the term of the Surface Lease has come to an end, a reclamation certificate for the Site has not been issued, and section 144 of the EPEA requires that a reclamation certificate be issued before a surface lease can be terminated. Upon learning of the Owner’s position that the Surface Lease had terminated, the Operator applied for, and received, the ROE out of an abundance of caution to ensure that it had legal access to the Site.

 

[31]             The Operator submits that by bringing the Section 27 Application, the Owner is admitting that the Surface Lease is valid because the Tribunal cannot review compensation for a terminated lease.

 

[32]            To date, the Operator has not filed for a termination of the ROE under section 28 of the Act. The Operator has not obtained the Owner’s consent to enter the Site and the parties have not entered into a new surface lease.

 

[33]            The Operator submits that the Site under the Surface Lease does not include the long portion of the access road cutting across the Land but only includes a small portion of the road adjacent to the equipment on the Site. Pieridae Alberta Production Ltd. (“Pieridae”) has granted the Operator the use of the access road cutting across the Land to access the Site pursuant to a road use agreement and the Operator is not responsible for its maintenance.

 

[34]            The Operator’s position is that the Tribunal should award $0.00 in compensation for the Section 23 Proceedings and that all compensation should be awarded under the Section 27 Application. Under the Section 27 Application, annual compensation should be varied to $4,500.00 for the loss of use and adverse effect. Should the Panel decide to award compensation in the Section 23 Proceedings, the Operator submits there should be no compensation for the value of the land granted (section 25(a) or (b)) as this was previously paid under the Surface Lease. The Operator asserts an award of per acre land value in the Section 23 Proceedings would amount to double compensation. However, if the Panel determines a land value payment is appropriate, the per acre land value is $7,500.00/acre.

 

[35]            The Operator submits that the amount of $4,500.00 in annual compensation for the Site is supported by Telford in the Market Value Appraisal and Compensation Report dated July 24, 2023 (the “Telford Report”). The effective date of review is November 12, 2019 if the Panel determines the Surface Lease is valid. The effective date is April 26, 2023 for the ROE. Although a pattern of dealings is not established, there is evidence of comparable negotiated agreements, and so the pattern of dealings principles should apply to the compensation analysis. The Owner has not provided any supporting evidence tied to loss of use and adverse effect that justifies his proposed increase. If the Tribunal were to accept the Owner’s submissions regarding an increase based on the cost of living, it would be an error of law. The only evidence before the Panel is Telford’s and so his evidence should be accepted.

 

[36]            The Operator submits it will not seek costs against the Owner if the Owner refrains from seeking costs against the Operator.

DECISION

 

The Panel decides:

 

1.              The Panel will consider the Section 27 Application because the Operator had an obligation to provide compensation under the expired Surface Lease until the ROE was issued and the Tribunal has the jurisdiction to review the rate of compensation.

 

2.              The appropriate rate of annual compensation pursuant to section 27 of the Act is $12,150.00 for the period November 12, 2019 – April 25, 2023. As the Surface Lease provides that compensation is due for each year in advance of the anniversary date of the Surface Lease, and there are no provisions for pro-rating or refunds, the full annual compensation of $12,150.00 is payable for the period November 12, 2022 – April 25, 2023.

 

a.      The evidence does not establish a pattern of dealings.
b.      The annual rate of compensation is $12,150.00 based on the best evidence before the Panel.
c.      Interest under section 27 of the Act is not awarded.

 

3.                  The compensation awarded pursuant to section 23 of the Act is as follows:

 

a.      $23,625.00 is payable for the taking under section 25(1)(b) of the Act based on 3.15 acres at $7,500.00/acre.
b.      $12,150.00 is the amount of annual compensation payable under section 25(1)(c) and section 25(1)(d) of the Act, effective April 26, 2023.
c.      There is no damage to the Land and no award is made under section 25(1)(e) or section 25(5) of the Act.
d.      There are no other factors that the Tribunal considers proper under the circumstances for compensation under section 25(1)(f) of the Act.
e.      The total compensation award for the period April 26, 2023 to April 25, 2024 is $35,775.00. The Operator made an initial compensation payment of $3,945.00. Therefore, the remaining compensation due for the period April 26, 2023 to April 25, 2024 is $31,830.00.
f.        The compensation is payable by the Operator to the Owner.
g.      Interest on the amount of $35,775.00 is payable from April 26, 2023 to June 27, 2023, and on the remaining $31,830.00 until such time as the payment is made, at the Bank of Canada Bank Rate on April 26, 2023.

 

4.                  The Panel reserves the rights of all parties, individually or otherwise, to return to the Tribunal for a determination of costs related to this matter.

 

REASONS FOR DECISION

 

1.                  Should the Panel consider the Section 27 Application given the Surface Lease had expired on November 12, 2019?

 

[37]            The Owner filed the Section 27 Application for review of the rate of compensation. This was followed by the Operator’s ROE Application, the Tribunal’s ROE Decision, and the subsequent Section 23 Proceedings to determine compensation triggered by the issuance of the ROE Decision. At the hearing, the Operator argued that, notwithstanding the ROE, the Panel should only review the rate of compensation under section 27, arguing that the Surface Lease still existed by operation of law. The Owner is not familiar with the application types but seeks appropriate compensation. Taking guidance from the decision Buffalo Resources Corp v Winkler, 2010 CanLII 98472 (AB SRB) (“Buffalo Resources”), the Panel finds that in these circumstances the Panel should consider the Section 27 Application. The Operator had an obligation to provide compensation under the expired Surface Lease until the ROE for the Site was issued on April 26, 2023, and the Tribunal has the jurisdiction to review the rate of compensation payable. However, once the ROE for the Site was issued, compensation became payable under the ROE.

 

[38]            The Owner is seeking to vary the rate as of November 12, 2019 and Telford opines that the effective date of review for the Section 27 Application is November 12, 2019.

 

[39]            Section 144(1)(a) of the EPEA requires that a reclamation certificate be issued before a surface lease can be surrendered or terminated:

144(1) Notwithstanding anything in any other Act or any surface lease or right of entry order,

 

(a)   no surrender of a surface lease is effective or binding on any person . . .

 

insofar as the surrender or termination relates to any interest of the registered owner, until a reclamation certificate has been issued in respect of the specified land affected by the surrender or termination.

 

[40]            There is no evidence before this Panel that a reclamation certificate has been issued by the AER for the Site.

 

[41]            In the case of Buffalo Resources, the Tribunal previously addressed the matter of the rights and continuing obligations under a surface lease that expired. In that decision, at page 10, the Tribunal indicated:

 

The Panel also accepts the arguments from both parties that the right of the Operator to enter onto the leased land for the purpose of operating the well site expired on April 23, 2009 [the expiry date of the lease]. In coming to this conclusion, the Panel has reviewed the case of Pennine Petroleum Corporation v. Anthony J. Bruder and Lorraine E. Bruder, ACQB Action No.: 0806 00757 (sic) (Exhibit 2, Tab 1) and was guided by the decision of the Honourable Mr. Justice Miller who held that Section 144 of the Environmental Protection and Enhancement Act would not automatically extend or renew the lease (Lines 25-28, page 18).

 

Further, the Board finds that the Operator’s obligations under the surface lease did not expire on April 23, 2009. This is consistent with Pennine v. Bruder where it was found that Section 144 of the EPEA maintains the obligation on the Operator to obtain a reclamation certificate. All parties acknowledge that the general obligation of an Operator to reclaim leased land persists even after the lease has expired or is no longer being used by the Operator.

 

By extension, the Panel finds that where a surface lease has expired, the obligation of the Operator to pay compensation under the surface lease will persist until the Land is reclaimed or a new right of entry is granted over the same land and compensation becomes payable under that right of entry. To do otherwise would in effect deny landowners the full and complete protections granted to them by Section 144 of the [EPEA]. In coming to this conclusion, the Panel attaches significant weight to the Landowner’s argument that without a continuing obligation to pay compensation the Operator would not be compelled to reclaim the leased land. As a result, this would in effect leave the landowner responsible for such measure.

 

[42]            The Panel finds that the effective date of review for the Section 27 Application is November 12, 2019. The effective date is November 12, the date the Surface Lease was made. Although the Surface Lease expired on November 12, 2019, the Panel applies the reasoning in Buffalo Resources and finds, in the absence of a reclamation certificate for the Site, the obligation of the Operator under the expired Surface Lease to pay annual compensation continues until a reclamation certificate has been issued for the Site or a new right of entry order is granted. The Panel further finds that consistent with Buffalo Resources at page 11, the Tribunal has the authority to review the rate of compensation payable of the expired Surface Lease until the land is reclaimed or a new right of entry is granted over the same land. As the ROE was granted over the same land on April 26, 2023, the Panel has the jurisdiction under section 27 of the Act to review the rate of compensation for the period November 12, 2019 – April 25, 2023.

 

2.         If the Panel should consider the Section 27 Application, what is the rate of annual compensation as of the effective date?

 

a.    Does the evidence establish a pattern of dealings? If so, is there a cogent reason to depart

            from the pattern of dealings?

a.      Do

[43]            It is the practice of the Tribunal to base compensation on a pattern of dealings where one exists, unless there are cogent reasons for doing otherwise. This approach is based on the underlying premise that the marketplace is usually the best determinant of fair and reasonable rates of compensation, consistent with that used in Livingston v Siebens Oil & Gas Ltd., 1978 AltaSCAD (CanLII), and now used routinely by the Courts and the Tribunal.  

 

[44]            The Owner did not argue there was a pattern of dealings and did not tender evidence of any negotiated agreements. The Operator admitted that its evidence does not establish a pattern of dealings.

 

[45]            Accordingly, the Panel finds that neither the Owner nor the Operator have established a pattern of dealings.

 

b.    If the evidence does not establish a pattern of dealings, what rate of compensation is supported by the evidence?

 

[46]            The Owner’s submissions for annual compensation are based on cost of living increases since 1999, the increased value of farmland, and the increased noise generated by the Bitcoin mining operation. He seeks annual compensation in the range of $36,450.00 - $50,600.00 for the period 2019 - 2039. The Operator submits that if the Tribunal were to accept the Owner’s submissions regarding an increase based on the cost of living, it would be an error of law. The Operator’s submissions are based on loss of use and adverse effect, nuisance, inconvenience and noise. The Operator submits that $4,500.00 is an appropriate amount for annual compensation. For the reasons that follow, the Panel finds that neither the Owner nor the Operator provided enough reliable evidence which supports the compensation amount claimed by either of them on a balance of probabilities. In all the circumstances, the annual compensation amount of $12,150.00 in the expired Surface Lease is considered by the Panel to be fair annual compensation for the period November 12, 2019 – April 25, 2023 given the activity and noise generated by the gas gathering, compression, processing of liquids, and Bitcoin mining operation.

 

Owner’s Evidence

 

[47]                 The Owner’s compensation request is largely based on inflationary increases since 1999. The Owner submitted gas prices had increased from 52.6/L to 139.9/L based on Statistics Canada and Google searches. He also submitted inflation from 1999 to 2023 had increased 69.21% according to the Bank of Canada. The Owner did not provide documentary evidence to support these submissions, although he provided a link to the inflation calculator of the Bank of Canada.

 

[48]            The Owner also tendered an MLS Listings Sheet which shows particulars of thirteen properties that were sold during the period 2008 – 2022 together with their list and sell amounts, as well as an “Historic FCC Farmland Values Report” published on September 27, 2021 (the “Farmland Report”). The Owner submitted that this evidence showed a three-to-four-fold increase in land values.

 

[49]            The Owner testified that a local real estate agent advised him that a lease for three acres should be at least $3,000.00/month. However, the Owner did not call this real estate agent as a witness or submit a report from the real estate agent.

 

[50]            The Owner also testified that he leases the remainder Land as pasture and that the noise and activity levels have increased since he bought the Land. The compressor was running on the Site when he initially bought the Land, but there wasn’t the noise and activity generated by the Bitcoin operation. Since the Bitcoin operation started, the Owner and his family have not been able to picnic on the Land as they used to because of the noise. He recorded the noise on an application on his phone and the Operator built a sound wall after he registered a complaint. The Owner did not tender the noise recording as evidence.

 

Operator’s Evidence

 

[51]            The Operator’s evidence was given by Geremia, the Operator’s President, and Telford. The evidence applicable to the section 27 review period is as follows.

 

[52]            Geremia testified about the Site and the Operator’s operations on the Site. He presented an AbaData Abstract and indicated that when the Operator acquired the Site the AER licence allowed for gas gathering, compression and the processing of liquids. The operation included a larger sweet gas plant in 1991 but the gas plant licence has been suspended. Geremia speculated that the presence of the gas plant may have been a significant reason for the substantial annual compensation amount paid under the Surface Lease.

 

[53]            Geremia explained that Persist gathers gas from approximately fifteen sweet gas wells in the field. The gas comes to the facility on the Site where Persist separates the field condensate and water from the natural gas. The field condensate is then trucked out to sales and the water is trucked out for disposal. The gas then goes to the Pieridae facility to be processed and sold.

 

[54]            Geremia explained that the Site is accessed through a road use agreement with Pieridae. He presented the Master Road Use Agreement dated January 1, 2019 (“Master Road Use Agreement”). Geremia asserted that the Master Road Use Agreement provides that it is Pieridae’s responsibility – not the Operator’s – to maintain the long access road cutting across the Owner’s Land except for a short portion of the road that is part of the Site.

 

[55]            Geremia presented a Site Plan dated October 5, 2022 showing the as-built survey and a photograph of the Site (the “Site Plan”). He described the Site as containing an office and garage, a water tank, an oil tank, a water tank, an active compressor, an inactive compressor, a separator, two sea cans for the Bitcoin mining processors, an office for the Bitcoin operation and generators which produce electricity. The Site Plan shows buildings and equipment, including a compressor and generators.

 

[56]            Geremia presented a satellite picture of the area. The picture shows the Canlin Sour Gas Processing Plant to be a large operation on a large area directly adjacent to the east of Persist’s smaller operation on the smaller Site.

 

[57]            Geremia testified that the Operator commissioned an Air Quality Assessment Report written by RWDI, dated June 29, 2022 (the “Air Quality Assessment Report”). Geremia presented the Air Quality Assessment Report and asserted that it confirms that the emissions of the Bitcoin mining operation are below the standards set by the government.

 

[58]            Geremia also testified that the Operator built a sound barrier to significantly reduce the noise after it conducted a noise impact assessment which revealed that the noise during the night was slightly above government standards. Geremia explained that all noise in the area is taken into account, including noise coming from the Canlin Sour Gas Processing Plant, the highway and the railway track. Geremia presented FDI Acoustics’ Noise Impact Assessment, dated February 17, 2023 (the “Acoustics Assessment”), and stated that it confirms that once the sound barrier was built, the sound at night complied with government standards. The Panel notes the Acoustics Assessment indicates at page III that the results of the environmental noise propagation model show the cumulative sound levels on the Site are “predicted to comply” with the daytime and nighttime permissible sound levels of the AUC and AER.

 

[59]            Geremia presented a letter dated December, 2022 from Persist that was sent to residents within 1.5 km of the Site informing them of its intent to install generators within the Site. Geremia testified that no response was received from any of the residents.

 

[60]            The Telford Report identifies the Site as being 3.15 acres, located in Rocky View County, approximately 5.5 miles west of the Town of Cochrane and south of Bow Valley Trail adjacent to the Canlin Sour Gas Processing Plant. It is also surrounded by industrial lands to the west and to the south. Across the river is a railway track. The Site is zoned Agricultural – General District and is an interior parcel. The highest and best use is for agriculture, specifically for pasture, because the soil is Class 7. There is an agricultural building on the Land and evidence of gravel extraction. There are currently no residential developments on the Site but there could be if they were set back properly from the Canlin Sour Gas Processing Plant.

 

[61]            Telford testified the facility is a built-up compressor that is fenced. The Operator accesses the Site on a daily basis using a pickup truck. A contractor accesses the Site once every one to two months for maintenance. A tanker truck accesses the Site approximately every six weeks to remove condensate. If significant maintenance is required, it is scheduled in conjunction with maintenance of the Canlin Sour Gas Processing Plant. The access road on the Land is leased from Pieridae except for a very short piece which forms part of the Site.

 

[62]            Regarding loss of use and adverse effect to determine annual compensation, Telford presented an “Empirical Approach” as well as a “Negotiated Agreement Review”. The Empirical Approach determines the sum of $1,332.00 to be the annual rate of compensation and the Negotiated Agreement Review determines the sum of $4,500.00 to be the annual rate of compensation.

 

[63]            With respect to the Empirical Approach, Telford indicates that there are two main methods to determine the appropriate rate for the loss of use of pasture: 1) calculating the grazing capacity of the subject lands and then calculating the loss of use based on this carrying capacity; or 2) determining the replacement cost of similar pasture lands. 

 

[64]            Regarding the grazing capacity, using the Agdex 130/53-1 publication, the Alberta Custom Rates Publications from Alberta Agriculture (2015 to 2016), and after discussions with representatives from the Alberta Ag Info Centre, Telford determined that the loss of use would be $42.00 per acre for improved pasture.

 

[65]            Turning to the replacement lands method, the 2015 – 2016 statistics in the Alberta Customs Rate Publication for Agriculture indicate that rental rates for pasture in Alberta range from $20.00 – $30.00 per acre. However, representatives from the Alberta Ag Info Centre advised that renting pasture on a per acre basis is not a current common practice. Most users and renters are using the grazing capacity method. Given most of the renting pasture per acre basis data is dated and does not reflect the current practices or renters, Telford gave it little weight.

 

[66]            Accordingly, Telford used the rate of $42.00 per acre to determine loss of use.

 

[67]            With respect to adverse effect, Telford considered both tangible and intangible factors.

 

[68]            The intangible factors of adverse effect, nuisance and inconvenience relate to the extra supervision of the cattle operation because of the operations on the Site, which he estimated to being 16 – 20 hours per year in the grazing season. At the rate of $50.00/hour this would amount to $800.00 - $1,000.00/year and Telford estimated that the compensation in this instance would be in the lower range of value given minimal visitation for grazing operations. On that basis, Telford estimated the adverse effect, nuisance and inconvenience to be $800.00 per year for tangible factors.

 

[69]            Regarding intangible factors, there are numerous items to take into account including noise, access and traffic concerns, visual effects, loss of quiet enjoyment, and time dealing with surveyors, contracts and the Operator on an ongoing basis. Telford’s opinion is that measuring the additional time associated with these factors is a realistic method of estimating intangibles. On this basis, Telford estimated that a full day per year (or 8 hours) dealing with the intangible aspects at $50.00 per hour for a total of $400.00 per year is appropriate in the circumstances. 

 

[70]            In sum, using the Empirical Approach, Telford concluded that the total loss of use is $132.00, and the total adverse effect is $1,200.00, for a total annual compensation amount of $1,332.00.

 

[71]            With respect to the Negotiated Agreement Review, Telford identified companies that have similar facilities within one township of the Site. The only operators identified were the Operator, Canlin, and Pieridae Energy/Shell Canada. These companies were contacted for information regarding their rent reviews or new acquisitions for the years 2015 – 2023 for oil and gas facilities on lands near or on lands that are currently being used for agricultural purposes.

 

[72]            The Telford report indicates that the net result was twenty agreements for well sites with access roads, with half of the agreements being with the Operator and the other half being with Pieridae. Telford clarified in his testimony that all the agreements were for rental reviews as there had been no new acquisitions in the area. Further, some of the well sites were stand-alone well sites but others had varying processing equipment on them such as processors or separators. There had been few variations in the rate over the last ten plus years with the annual rate being stable. He identified the most similar comparables in terms of size as 1, 2, 10, 11 and 12 that range in value between $3,000.00 – $5,000.00 per year. 

 

[73]            Telford testified that none of the sites had compressors or electric generators on them running twenty-four hours a day. He stated that there was a lot of variation with the equipment and that most of the comparables did not only have a single wellhead. However, he was unable to identify with any degree of specificity the type of equipment situated on any of the comparables.

 

[74]            The loss of use in the agreements ranged from $200.00 – $350.00 per acre. Applying those values to the adverse effect portion of the annual compensation, the mean is $2,472.00 – $3,390.00. Because of the compressor, the Site would be expected to be near the higher range of values.

 

[75]            Taking these factors into consideration, Telford applied a rate of $350.00 per acre for loss of use, and $3,400.00 for adverse effect, for a total sum of $4,500.00 for annual compensation.

 

[76]            The Operator argued that although it has presented evidence of comparable negotiated agreements rather than a specific pattern of dealings, the principles that apply to pattern of dealings should apply in this proceeding. The Operator submitted that the amount of $4,500.00 per year is the appropriate annual compensation to be awarded given the evidence of comparable negotiated agreements, loss of use, and adverse effect. Citing Enbridge Pipelines (Athabasca) Inc. v Karpetz, 2010 ABQB 108, the Operator argued it does not require evidence of relative knowledge of the owners, any degree of willingness of the owners, or an equality of the bargaining position between the owners and the operators, to reach the conclusion that $4,500.00 is the appropriate annual compensation under the Surface Lease.     

 

Analysis                             

 

[77]             The Panel rejects the Owner’s submissions regarding increases based on an inflationary increase because to accept them would be an error of law.

 

[78]            The Act stipulates that the amount of annual compensation payable under a surface lease is governed by sections 25(1)(c) and 25(1)(d), which provide that compensation is based on the loss of use and adverse effect to an owner or occupant as of the effective date of review. The Court of King’s Bench has confirmed in two cases that increases in the cost of living cannot be considered by the Tribunal when considering the amount of compensation payable pursuant to sections 25(1)(c) and (d). In Laschuk v Canadian Natural Resources Ltd., 2003 (ABQB 135), the Court indicated:

 

[10]      In referring to the Appellants’ argument relating to increase in the cost of living and conducting business, the Board correctly point out that it could not consider inflation in its determination of compensation, citing Barber et al. v. Pan Canadian Petroleum Ltd., (1979), 18 L.C.R. 75 (Q.B.), wherein Rowbotham, J. made this point based on the fact that the Act provides for a periodic review of compensation awards.

 

[79]            Both Laschuk v Canadian Natural Resources Ltd. and Barber et al v Pan Canadian Petroleum Ltd., are binding on the Tribunal. Accordingly, the Panel is unable to award a compensation rate based on inflation.

 

[80]            Further, the Owner did not provide any evidence regarding loss of use. The Farmland Report and MLS Listings Sheet he tendered are about land values, not loss of use of the Site. None of the inflation evidence presented is with respect to loss of use. The Owner did not establish a pattern of dealings, or tender negotiated agreements or empirical evidence to support loss of use.

 

[81]             Regarding adverse effect, the Owner testified that the activity and noise levels had increased to such an extent that he and his family were no longer able to picnic on the Land. Although the Owner did not provide any empirical evidence, such as the noise recording he indicated he had recorded on his phone or any sound reports, Geremia admitted that the noise levels at night were slightly over government standards until the sound barrier was built. The Acoustics Assessment, which was written after the sound barrier was built, shows at page III that the results of the environmental noise propagation model indicate the cumulative sound levels on the Site are “predicted to comply” with the daytime and nighttime permissible sound levels of the AUC and AER. The Owner did not provide any evidence to rebut the findings in the Acoustics Assessment. The Panel accepts the evidence of the Owner that the noise and activity levels have increased. However, the Panel also finds that once the sound barrier was built, the increased noise complied with the permissible sound levels of the AUC and the AER. 

 

[82]            The Owner provided no other evidence about adverse effect, nuisance or inconvenience.

 

[83]            The Panel determines, on a balance of probabilities, that the Owner’s evidence regarding loss of use and adverse effect does not support the annual compensation amounts he is claiming.  

 

[84]            Turning to the Operator, the Operator argues that the Panel should base its decision on the Negotiated Agreement Review analysis in Telford’s Report that concludes $4,500.00 is the appropriate annual compensation.

 

[85]            The Panel finds that the comparables in the Negotiated Agreement Review contained in the Telford Report are not helpful in determining the rate of compensation for the following reasons:

a.         The report indicates that all comparable sites have wellsites and access roads. Although Telford clarified in his testimony that there is a variety of equipment on the comparable sites, he was not able to specify the type of equipment on each comparable site other than to say that there are no sites with compressors or generators.

 

b.          Half of the agreements presented were entered into with the Operator and the other half were entered into with Pieridae and its predecessor, Shell Canada Limited. Providing agreements of only two companies – one of which is the Operator in the subject proceedings – is not representative of the current leases in the area.

 

c.         A number of the agreements and agreement amendments were negotiated in the late 1990’s or early 2000’s, and the compensation had not been amended since. There is no evidence before the Panel that the compensation had been negotiated more recently between the parties. See, for example, comparables 1, 2, 3, 4, 9, 10, 11, 12. Some other compensation amounts were amended five years or more from the effective date of November 12, 2019. See, for example, comparables 5, 6, 16, 18, 20. Thus there is little evidence before the Panel of surface lease compensation rates that were negotiated at a reasonable time within the effective date of November 12, 2019.

a.   Half

[86]            The Panel notes that the Operator did not argue that the Empirical Approach should be used to establish an amount of annual compensation. The empirical evidence submitted by the Operator is general in nature and not based on actual information provided by the Owner. Telford used Alberta government publications and information derived from discussions with representatives from the Alberta Ag Info Centre. He could not use numbers specific to the Land as the Owner provided no information about the grazing operations on the Land. As a result, the Panel places little weight on the Empirical Approach because it is too hypothetical.

 

[87]            Accordingly, the Panel is not persuaded the evidence presented by the Owner and the Operator supports the compensation amounts claimed by either of them. The amount payable of $12,150.00 for loss of use and adverse effect in the Surface Lease is considered by the Panel to be the best evidence of fair compensation under the circumstances. During the period of review, the Site under the Surface Lease had an AER Licence which allowed for gas gathering, compression, the processing of liquids and permitted a sweet gas plant as well. The Panel recognizes that the gas plant was not operational and thus there was no adverse effect from the gas plant. However, the gas gathering, compression, and processing of liquids still occurred on the Site. In addition, there was noise and activity generated by the Bitcoin mining operation as evidence presented by the Operator shows it commenced its Bitcoin operations during the period of review. Although the sound level of the Site complied with the daytime and nighttime permissible sound levels of the AUC and AER once the sound barrier was built, the compressor and generators were nevertheless noisy. The adverse effect that was once a result of the sweet gas plant had now largely been replaced with the notice and activity generated by the Bitcoin mining operation. The Panel therefore finds that there was adverse effect during the period of review, not only as a result of the gas gathering, compression and the processing of liquids, but also because of the noise and activity generated by the Bitcoin mining operation.

 

[88]            In these circumstances, the Panel determines that the appropriate rate of annual compensation pursuant to section 27 of the Act is $12,150.00, for the period November 12, 2019 – April 25, 2023.

 

[89]            Furthermore, the Applicant is entitled to the full amount of the annual compensation in the amount of $12,150.00 for the period November 22, 2022 – April 25, 2023 as the Panel concludes that there are no terms in the Surface Lease providing for pro-rated payments or compensation refunds. The Panel notes that the Surface Lease stipulates that the annual compensation is payable “in advance of the anniversary of the date of this Lease Agreement” and that there is no provision for pro-rated payments. The Panel also notes that paragraph 13 of the Surface Lease indicates that if the lessee surrenders the Site and terminates the Surface Lease that there “shall be no refund to the lessee of any compensation which may have been paid in advance.” The Panel therefore determines that the intention of the parties was for the annual compensation to be paid in advance of the anniversary date of the Surface Lease without pro-rating or refunds.

 

c.          Is interest payable, and if so, at what rate and to whom?

 

[90]            Interest may be awarded under section 27(15) of the Act when an operator fails to provide notice under section 27(4) for a review of compensation. However, the Owner did not apply for interest and no interest is payable as the rate of compensation under the expired Surface Lease remains unchanged.

 

3.                  What amount of compensation is payable under section 23?

 

[91]            For the reasons set out below, the Panel finds that with respect to the payment of compensation, the ROE replaced the Surface Lease in its entirety on April 26, 2023, and awards $35,775.00 in compensation payable under section 23 for the period April 26, 2023 – April 25, 2024, broken down as follows:

 

                        i.         $23,625.00 for the taking under section 25(1)(b) of the Act based on 3.15 acres at $7,500.00/acre; and

 

                       ii.         $12,150.00 in the amount of annual compensation payable under section 25(1)(c) and section 25(1)(d) of the Act.

 

[92]            The issuance of the ROE by the Tribunal triggered proceedings under section 23 of the Act for the Tribunal to determine the amount of compensation payable for the ROE:

 

23 On making a right of entry order, the Tribunal shall, in accordance with its rules, hold proceedings to determine the amount of compensation payable and the persons to whom it is payable.

 

[93]            Determination of compensation is prescribed. The Act stipulates that on granting a right of entry order, the Tribunal “shall” hold a compensation hearing. 

 

[94]            Further, the Tribunal confirmed in ENMAX Power Corporation v Remington Development Corporation, 2020 ABSRB 203 (“Remington”) at paragraph 38 that compensation for surface leases is determined under sections 27 and 30, whereas section 23 is specific to right of entry orders. Section 23 authorizes the Tribunal to determine compensation for a right of entry order from the date of issuance. 

The Tribunal then went on to explain at paragraph 42:

 

[42]      Section 16 of the Act confers the rights in the operator by right of entry order which may be distinct from those held by the operator before the orders were made, or pursuant to previous agreements. Any prior agreements may or may not have been for any purpose for which the right of entry order was made or for which the Board may grant a right of entry order. . .  

 

[95]            Accordingly, if a right of entry order is issued over lands that are or were held by another instrument, the right of entry order’s rights and obligations are separate from any rights or obligations that may be conferred in the previous instrument. This Panel adopts the reasoning in Remington.

 

[96]            In this proceeding, the ROE was granted under the same Licence for the same land with the same Operator. It would be absurd for two right of entry instruments, governing the same land under the same licence with the same Operator, to exist. The Panel finds that with respect to the payment of compensation, the ROE replaced the expired Surface Lease in its entirety and, as of April 26, 2023, compensation became payable under the ROE.

 

[97]            The heads of compensation under section 27 and section 23 of the Act are not identical. The Section 27 Application is to review the rate of compensation payable under the expired Surface Lease. “Rate of compensation” is defined in 27(1)(d) of the Act as the amount of compensation payable on an annual or other periodic basis under a surface lease or compensation order for loss of use and adverse effect. Interest and costs may also be awarded.

 

[98]            In contrast, the Section 23 Proceedings determine the amount of compensation payable under the ROE. The Panel, when determining “the amount of compensation payable”, may consider a number of factors enumerated in section 25 of the Act, including the value of the land taken in the ROE, annual compensation for loss of use and adverse effect, and any other factors that the Panel considers proper, plus interest and costs. Compensation is not limited to annual compensation for loss of use and adverse effect. The Owner has the right to have compensation determined by the Tribunal as prescribed by section 23 of the Act, effective April 26, 2023.

a.   What amount of compensation, if any, is payable for the taking under s. 25(1)(a) or s. 25(1)(b) of the Act?

[99]            The Panel finds that $23,625.00 is payable for the Site pursuant to section 25(1)(b) of the Act for the following reasons.

 

[100]        Section 25(1)(a) and (b) provides:

25(1) The Tribunal, in determining the amount of compensation payable, may consider

(a)   The amount the land granted to the operator might be expected to realize if sold in the open market by a willing seller to a willing buyer on the date the right of entry order was made,

(b)   The per acre value, on the date the right of entry order was made, of the titled unit in which the land granted to the operator is located, based on the highest approved use of the land, . . .

 

[101]        The Owner did not make specific submissions about land value payable pursuant to section 23. However, as part of his evidence, he submitted the MLS Listing Sheet and the Farmland Report which involve land values.

 

[102]         The Operator submits there should be no compensation for the per acre value of the land, relying on the Telford Report and Telford’s testimony.

 

[103]        Telford opines that section 25(1)(a) is not applicable since the Site is not considered to be a small parcel that is marketable due to its shape; section 25(1)(b) is not applicable because the initial consideration for the Site would have been paid at the time the Surface Lease was first entered into. Telford testified that he was aware of similar instances in Drayton Valley where there has been a replacement of the same rights, and in those instances the initial consideration for market value was not paid again, but Telford did not produce those agreements. Telford concluded that market value is not payable for the Site under the ROE.

 

[104]        The evidence in this proceeding is that the Surface Lease expired and that, despite negotiations, a new surface lease had not been entered into between the parties. To continue its operations, the Operator applied for, and was issued, the ROE. The ROE is a new instrument, separate from the Surface Lease, and it has replaced the Surface Lease in its entirety. Market value has not yet been paid for the Site pursuant to the ROE. Although Telford testified he was aware of instances where there was a replacement of the same rights and the market value for the land was not paid in those instances, he was not able to produce those agreements. The Panel also notes that, because they were agreements, the parties in those instances could negotiate the terms of compensation. In this proceeding, the Tribunal has the jurisdiction under section 23 to determine compensation because an ROE was issued. The Panel takes guidance from Remington where the Tribunal determined that compensation under section 27 is distinct from that under section 23 relating to the granting of right of entry orders. As land value has not yet been paid pursuant to the ROE, the Panel determines that the Owner is entitled to land value of the Site in accordance with section 25(1)(b) of the Act.

 

[105]        Turning to the amount payable for land value, Telford’s opinion is that the value is $7,500.00/acre. Telford indicated the highest and best use of the Land is agricultural and the market for agricultural land has been increasing at a rate of approximately 5.0% per annum during the time reviewed. Telford identified four comparable land holdings that were sold in 2019 – 2022. The four comparable sales were compared to the Land based on highest and best use, property rights, financing, conditions of sale, market conditions, location, access, configuration, land use designation, size, improvements, topography, and soil ratings.

 

[106]        Telford opined that, other than time adjustments, only one adjustment was required for his comparables: Sale 2 is considered to be in a superior location and was adjusted by -20% (Sale 7 in the Owner’s evidence). The four comparable sales identified range from a low of $6,754.00 per acre to a high of $8,861.00 per acre. In terms of present and future use, Sales 1, 3 and 4 are considered to be the best comparables with a mean of $7,457.00/acre and a median of $7,499.00/acre.

 

[107]        Telford concluded that the estimated land value of the bare Land as of the effective date of April 26, 2023 is $7,500.00/acre.

 

[108]        The Owner testified that the MLS Listings Sheet he produced shows that land values have increased significantly since 1999. He also testified that the Farmland Report shows that farmland has increased three-to-four-fold in value since 1999.

 

[109]        Telford reviewed both the MLS Listings Sheet and the Farmland Report in his rebuttal report dated August 4, 2023 (the “Telford Rebuttal Report”) and presented the Telford Rebuttal Report during the hearing.

 

[110]        Telford reviewed the MLS Listings Sheet on the basis of standard appraisal practice where the appraiser reviews sales that have closed in the previous three years or properties that are considered to have similar attributes such as size, location, improvements, land use designation, topography, uses and soil class.  Telford noted that only three of the sales closed in the last three years, being Sales 7, 9, and 11. Sales 9 and 11 have superior land use designation, location, and more development potential. Sale 11 also included residential and recreation improvements. Sale 7 was a comparable included in the Telford Report and, as indicated in the Telford Report, required a downward adjustment as it has a superior location due to the development potential. Telford noted that none of the sales provided by the Owner are located adjacent to a large sour gas plant.

 

[111]        Telford also reviewed the Farmland Report in the Telford Rebuttal Report and presented his findings in the hearing. Telford indicated that, based on a review of the data, the average Alberta value in 2020 for the subject region is $4,100.00 per acre.

 

[112]        The Panel notes that the Owner’s market value evidence is not presented by a certified appraiser using appraisal industry standards. Further, most of the sales presented are old and the others, with the exception of Sale 7, are not comparable. Sale 7 was also included in the Telford Report (Sale 2) where Telford made a downward adjustment of 20%.

 

[113]        Telford is a certified appraiser and he used appraisal industry standards in selecting and adjusting comparables. Therefore, the Panel finds Telford’s comparable analysis to be a more reliable and accurate estimate of the market value of the Land than the Owner’s comparables. Telford’s four comparable properties sold during three years of the effective date are included, and the three best comparables, which did not require adjustments, sold with a mean of $7,457.00/acre and a median of $7,499.00/acre.

 

[114]         Accordingly, the Panel determines that the market value of the Land, as of the effective date of April 26, 2023, is $7,500.00/acre. As the Site is 3.15 acres, the total awarded for land value is $23,625.00.

 

b.         What amount of compensation, if any, is payable for ongoing loss of use, adverse effect, nuisance, inconvenience and noise under s. 25(1)(c) and (d) of the Act?

[115]        The Panel determines that ongoing loss of use and adverse effect are payable under the ROE, effective April 26, 2023, in the annual sum of $12,150.00.

 

[116]        The Operator submits loss of use (section 25(1)(c)) and adverse effect (section 25(1)(d)) are addressed in the annual compensation amount under the Section 27 Application. Telford opines in the Telford Report that only “one set” of loss of use and adverse effect impacts are applicable in these proceedings as paying for both under the Surface Lease in the Section 27 Application and under the ROE in the Section 23 Proceedings would amount to paying for the same impacts twice. The Owner did not make submissions with respect loss of use and adverse effect payable pursuant to section 23 of the Act.

 

[117]        Taking guidance from Buffalo Resources, the Panel finds the obligation of the Operator to pay loss of use and adverse effect under the Surface Lease ended once the ROE was issued. However, taking guidance from Remington, the Panel finds there is a new obligation to pay loss of use and adverse effect which commenced with the issuance of the ROE.

 

[118]        Earlier in this decision, the Panel determined the annual rate of compensation to be $12,500.00 under section 27 for loss of use and adverse effect. The Panel notes that the evidence that was applied in the section 27 analysis is applicable to the section 23 analysis, with one addition. It was only on April 24, 2023 that the AUC approved the construction and operation of the natural gas-fired power plant on the Site consisting of three generators. Geremia testified that the electricity from the power plant is currently used to electrify sea cans on the Site that process data for Bitcoin. The AUC Decision submitted by the Operator indicates that the Operator has confirmed that the power plant will comply with the AUC noise rule. Although the sound level of the Site complies with the daytime and nighttime permissible sound levels of the AUC, the compressor and generators are nevertheless noisy. As indicated earlier, the adverse effect that was once a result of the sweet gas plant has now largely been replaced with the notice and activity generated by the Bitcoin mining operation. The Panel therefore finds that there is adverse effect, not only as a result of the gas gathering, compression and the processing of liquids, but also because of the noise and activity generated by the Bitcoin mining operation.

 

[119]        The Panel therefore determines that an appropriate annual rate of compensation for loss of use and adverse effect under the ROE is $12,150.00. This amount is payable effective April 26, 2023, the date the ROE was issued.

 

[120]        The Panel recognizes that the Applicant will receive compensation under both the Surface Lease and the ROE for the period April 26, 2023 – November 11, 2023. However, in this proceeding there are two separate right-of-entry instruments with two separate sets of compensation obligations. Under the Surface Lease, payment was due in full before November 12, 2022 for the period November 12, 2022 – November 11, 2023. Once the ROE was issued, a new compensation obligation became effective with payment due on April 26, 2023 for the period April 26, 2023 – April 25, 2024. As the ROE has replaced the Surface Lease in its entirety effective April 26, 2023, the Operator as of April 26, 2023 has no further future compensation obligations to the Applicant under the Surface Lease.

 

c.          Has damage to the land occurred and, if so, what is reasonable compensation under section 25(1)(e) and section 25(5) of the Act?

 

[121]        The Owner testified that the Operator does not maintain the access road. The alleged lack of maintenance of the access road is a matter that falls under sections 25(1)(e) and 25(5) of the Act. The Tribunal determines that compensation is not payable under either section for the following reasons.

 

[122]        Section 25(5) allows the Tribunal to award compensation “for damage caused by or arising out of the operations of the operator to any land of the owner or occupant other than the land granted to the operator if those operations were incidental to the operation of the operator” (emphasis added). The Panel has reviewed the Master Road Use Agreement between the Operator and Pieridae and finds that the long portion of the road cutting across the Land outside of the Site is the portion of the access road which is controlled and operated by Pieridae. Accordingly, as the Operator is not responsible for maintaining the access road outside of the Site, the claim against the Operator is dismissed under section 25(5) of the Act.

 

[123]        Section 25(1)(e) allows a Tribunal to award compensation for “the damage to the land in the area granted to the operator that might be caused by the operations of the operator” (emphasis added). According to the Road Plan in the Master Road Use Agreement, there is only a short piece of road adjacent to the equipment that forms part of the Site. The Owner did not provide any pictures or other empirical evidence to describe the condition of the access road on the Site. The Operator submits that section 25(1)(e) is not applicable in this proceeding as any damages that may occur are considered temporary in nature and would be best handled in a damage settlement pursuant to section 30 of the Act. The Panel is not persuaded based on the evidence before it that there is damage to the road on the Site and therefore dismisses the claim under section 25(1)(e) of the Act.

d.          Are there any other factors that the Tribunal considers proper under the circumstances for compensation under section 25(1)(f) of the Act?

[124]        There are no other factors that the Tribunal considers proper for compensation under s. 25(1)(f) of the Act.

e.          To whom is compensation payable?

[125]        Section 25(5) of the Act requires the Tribunal to determine the person to whom the compensation is payable. The Panel finds that the compensation is payable by the Operator to the Owner as he is the person identified in the certificate of title as the owner of the Land.

f.          Is an adjustment necessary from the total compensation award because of the initial payment made by the Operator under section 25(6)?

[126]        Section 25(6) of the Act provides:

 

When the Tribunal makes a compensation order, it shall offset the amount paid as part payment of compensation to the respondent under section 20 or to the Tribunal under section 22 against the total compensation it determines to be payable to the respondent, and

 

(a)                 in a case where the money was paid to the respondent under section 20,

 

(i)      if the amount the Tribunal determines to be payable exceeds the amount paid, it shall order the operator to pay the difference to the respondent . . .

 

[127]        The total compensation award for the period April 26, 2023 to April 25, 2024 is $35,775.00. The Operator made an initial prepayment of the compensation pursuant to section 20 of the Act on June 27, 2023 in the amount of $3,945.00. Therefore, the remaining compensation due to the Owner is $31,830.00 for the period April 26, 2023 to April 25, 2024.

g.          Is interest payable, and if so, at what rate and to whom

 

[128]        Pursuant to section 25(9) of the Act, the Tribunal may order an operator to pay interest on any or all of the compensation payable on and from the date the right of entry order was made, at the “Bank of Canada rate” on the date the right of entry order was made.

 

[129]        The Tribunal finds that the “Bank of Canada rate” referred to in section 25(9) of the Act is the “Bank Rate” set by the Bank of Canada.

 

[130]        The Panel determines that interest on the amount of $35,775.00 is payable from April 26, 2023 (the ROE date) to June 27, 2023 (the date of initial payment), and on the remaining $31,830.00 until such time as the payment is made, at the Bank Rate set by the Bank of Canada on April 26, 2023.

4.         Are costs payable, and if so, what amount is payable and to whom?

 

[131]        The Owner initially indicated that he was seeking reimbursement of legal fees incurred to date. However, in the hearing the Owner indicated that he would not seek costs against the Operator based on the Operator’s submissions that it would not seek costs against the Owner if the Owner refrained from seeking costs against the Operator. In these circumstances, the Panel reserves the rights of all parties, individually or otherwise, to return to the Tribunal for a determination of costs related to this matter.

 

ORDERS

 

       

IT IS ORDERED that:

The rate of annual compensation payable by the Operator to Roy Daniel Flowers under the Surface Lease dated November 12, 1999 is TWELVE THOUSAND ONE HUNDRED FIFTY and 00/100 DOLLARS ($12,150.00) for each of the following periods:

 

November 12, 2019, to November 11, 2020;

November 12, 2020 to November 11, 2021;

November 12, 2021 to November 11, 2022;

November 12, 2022 to April 25, 2023;

 

IT IS FURTHER ORDERED that the compensation payable by the Operator for the rights granted in Right of Entry Order LPRT2023/SR0236 dated April 26, 2023 is:

 

a.      The sum of THIRTY-FIVE THOUSAND SEVEN HUNDRED SEVENTY-FIVE and 00/100 DOLLARS ($35,775.00), less the initial compensation payment made of THREE THOUSAND NINE HUNDRED FORTY-FIVE AND 00/100 DOLLARS ($3,945.00), payable to Roy Daniel Flowers;

 

b.      After April 25, 2024, for so long as Right of Entry Order LPRT2023/SR0236 is in effect, the sum of TWELVE THOUSAND ONE HUNDRED FIFTY and 00/100 DOLLARS ($12,150.00), to be paid on or before April 26, 2024, and on or before April 26 in each year afterward, to Roy Daniel Flowers.

 

Interest is payable on any unpaid balance owing at the Bank of Canada Bank Rate in effect as of the effective date of Order LPRT2023/SR0236.

 

            Dated at the City of Edmonton in the Province of Alberta on the 31st of May, 2024.

 

LAND AND PROPERTY RIGHTS TRIBUNAL

 

 

__________________________________________

Glenn Selland, Member

 


 

APPENDIX A

 

EXHIBITS:

 

Exhibit

Number

Description

Filed by:        

1

LPRT Hearing Documents Package (HDP SL2022.0350

LPRT and Parties

2

LPRT Hearing Documents Package (HDP) RE2022.0022

LPRT and Parties

3

2023-07-20_Flowers 2020-historic-farmland-values-report

Applicant/Respondent

4

2023-07-20_Flowers Document for LPRT File SL2022.0350(+1)

Applicant/Respondent

5

2023-07-20_Flowers Realestate comparables

Applicant/Respondent

6

List of Documents for ALPRT Hearing – July 25, 2023(57794353.1)

Operator

7

Rebuttal Disclosure – Persist (57957350.1)

Operator