PIPELINE
SUMMER 2017
CANADIAN ASSOCIATION OF ENERGY AND PIPELINE LANDOWNER ASSOCIATIONS
OBSERVER PIPELINES FOR PEACE
Why Canada’s major pipeline projects are good for the world
GREEN SCENE
Pipeline contractors value conservation
LAND OF THE FREE
Property rights are vital to a liberal democracy
MODERNIZING THE NEB Landowners are still an afterthought
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WHAT MATTERS TO YOU It takes more than energy to power a community. It takes a connection. A connection we share with more than 95,000 landowners across North America. Because ultimately, we’re working for you – the people who benefit from the energy we safely transport and with whom we work closely across the many diverse communities where we live and operate as your neighbour. At TransCanada, we are committed to treating landowners with honesty, respect and fairness. We never stop examining our own efforts, setting targets and continually striving for improvement in everything we do. Because that’s what matters to you.
www.transcanada.com 2
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CONTENTS
SUMMER 2017
CANADIAN ASSOCIATION OF ENERGY AND PIPELINE LANDOWNER ASSOCIATIONS
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04 08
Lessons Learned
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Keystone XL’s New Lease on Life in Nebraska
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A Clear View
12 On the cover:
Cover photo: iStockphoto.com
Oil and gas from Canadian energy transport projects offer the world a safe, reliable and ethical choice.
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CAEPLA has a track record of success
What Will NEB “Modernization” Mean for Landowners? Private property vs. treaty rights
A second chance for TransCanada
The latest in pipeline fitness technology
A Fine Balance
Pipeline contractors take conservation seriously
A Failing Formula
Surface Rights Boards are failing landowners
Pipelines for Peace
Canadian pipelines play a role in world peace
We Are All Pipeline Owners And it’s time to celebrate
Strength in Numbers
Together landowners can protect their rights
Private Property Rights Matter
Trespassers threaten the common good
What Remains
How expropriation impacts land value
Collectivism Poisons Pipeline Prosperity Decision making belongs to landowners
Incentivization Instead of Expropriation Are tax breaks the answer?
The Fox in the Henhouse
Why landowners shouldn’t trust the NEB
Meeting of the Minds
CAEPLA brings landowners together
Pipeline Observer is a publication of the Canadian Association of Energy and Pipeline Landowner Associations (CAEPLA), 257, 918 Albert St., Regina, SK S4R 2P7; 306-522-5000. All contents copyright ©2017 CAEPLA. Advertising information: advertising@caepla.org | Editorial: editor@caepla.org Administration: admin@caepla.org | caepla.org | Twitter: @CAEPLA
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B Y D AV E C O R E
Lessons Learned How CAEPLA helped TransCanada get its XL pipeline approved in 2008 and the lesson it offers Nebraska landowners today
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n 2007 we were traveling across Manitoba and Saskatchewan doing ratification meetings with 400 Enbridge pipeline landowners who we had just negotiated a settlement for on the proposed Southern Lights and Alberta Clipper projects. Those landowners unanimously ratified that settlement agreement and with their signatures, a new era of landowner and industry relations began. At our last meeting on the west side of Saskatchewan, a gentleman introduced himself to me, he said his name was Jim Ness and he was from New Brigden, Alberta. He wondered if CAEPLA would be able to come over to Alberta and help him and his neighbours deal with TransCanada (TCPL) on a proposed project that would see a new pipeline built on their property. He referred to it as the “Keystone Project” and said although many of his neighbours had already signed, seeing what we had accomplished on the Enbridge project made him realize they were all signing a bad deal. I had been following the project and
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knew that the National Energy Board (NEB) had already approved it, but realized that if there were still landowners who had not signed there might be a chance we could get TransCanada to the table to negotiate resolution to landowner concerns. I told him I couldn’t promise anything but, as always, said “if we attempt nothing, then nothing could possibly be gained.” Fortunately, when Jim got word to his neighbours what had been accomplished by landowners coming together with CAEPLA on the Enbridge projects, they were able to convince close to 100 other Alberta landowners to work together with CAEPLA on this project — those that hadn’t signed and those that already had. And as it turned out, TransCanada at this time had also applied to the NEB to increase the output of the proposed pipeline, which opened the door for us to get the company to the table. It also provided a legitimate opportunity for those landowners who had already signed, when faced with the threat of right of entry, to revisit the original lowball deal few were happy with. After much back and forth TCPL
A cattle ranch in Nebraska’s Sandhills where the Keystone XL pipeline is proposed to cross.
finally agreed to negotiate but requested that perhaps we could negotiate another proposed project at the same time. That project was the XL pipeline — a TransCanada dream. After a number of negotiation meetings we finally hammered out a settle-
Jim West / Alamy Stock Photo
ment agreement on both the Keystone and XL pipelines with TransCanada for the Alberta Association of Pipeline Landowners (AAPL) whose membership covered the routes in Alberta and even Saskatchewan. That agreement was modeled on
the precedent-setting Enbridge deal we had done the year before, only this time TransCanada demanded its deal be “confidential.� At the ratification meeting held to vote on this agreement we again had a unanimous vote and everyone said they
could not believe what had been accomplished. The community held a steak dinner in recognition of what they had won by working together and to thank CAEPLA for providing our experience in getting the deal done. That deal was dated August 7, 2008.
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What was accomplished I will explain what was accomplished in general terms in these settlements by quoting from an article provided by the press regarding the Enbridge settlement written by one of CAEPLA’s legal counsel, Paul Vogel: “Supported by representatives from Ontario, the Manitoba Pipeline Landowner Association (MPLA) and the Saskatchewan Association of Pipeline Landowners (SAPL) successfully negotiated on behalf of their members commitments from Enbridge to address liability for abandoned pipelines, regulatory restrictions on crossing pipelines with agricultural equipment, limited easement access, location of surface facilities, conduct parameters and compensation for maintenance dig operations, resolution of construction disputes, topsoil preservation, responsibility for drainage issues, weed control and compensation.”
These settlement agreements helped find resolutions to: “escalating concerns landowners have with respect to environmental, social and economic impacts being experienced as a result of continuous expansion of pipeline utility corridors.”
They also addressed pipeline design and safety concerns related to proposed depth of cover, pipe thickness and future pipeline abandonment; cumulative soil and productivity impacts related to multiple pipeline construction restrictions on both more intensive agricultural land use and future development and deficiencies in current compensation packages with respect to recognizing continuing financial impacts. Vogel writes “…… the MPLA/SAPL settlement is a good example of landowners from one region helping landowners in other regions successfully deal with the impacts of pipeline construction and operations on farm operations and productivity and the income safety and well-being of farm families.”
Win, Win Simply put CAEPLA was able to help landowners negotiate business agreements that were a “win, win” for both them and the companies. The agreements respected landowner stewardship responsibilities, safety, environment, property rights, businesses and families. At the same time, they also provid-
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ed both companies and in particular TransCanada, with its future XL dream, an opportunity to build good public relations, avoid having to use expropriation (known as eminent domain in the U.S.) and get quick regulatory and public support for the project in Canada. It’s too bad TransCanada did not
Now that President Trump has greenlit the project, perhaps it is time for CAEPLA to help turn the corner and provide Nebraska landowners an opportunity to create a business partnership with TransCanada like we did in Canada.
take this valuable experience in Canada to the United States in its dealings with landowners there. I have recently spoken with landowners in the U.S. and it seems the company defaulted back to industry’s old “sign this offer or else” strategy. Or else, in this case, they will use eminent domain. This simply created an opportunity for the anti-pipeline movement to pick up disgruntled landowner supporters to provide President Obama the political opposition and cover he needed to turn the project down. Now that President Trump has greenlit the project, perhaps it is time for CAEPLA to help turn the corner and provide Nebraska landowners an opportunity to create a business partnership with TransCanada like we did in Canada. CAEPLA has the track record and boosted TCPL’s bid for regulatory approval back in 2008 by encouraging and enabling the company to respect landowners and their property rights. CAEPLA is ready to help both landowners and TransCanada come to another “win, win” agreement.
Dave Core is founding president and CEO of the Canadian Association of Energy and Pipeline Landowner Associations. Dave has been active in the pipeline landowners movement for nearly three decades.
WHO DO YOU THINK HAS YOUR BEST INTEREST AT HEART WHEN IT COMES TO FOOD SECURITY AND THE ENVIRONMENT? Manitoba's family farmers who live and work on the land 24/7/365
OR
Manitoba Hydro, a crown corporation?
Manitobans have a responsibility to uphold property rights and the freedom of association.
SIGN THE PETITION AND STOP THE BULLYING
Visit StopHydroBullies.ca to sign the petition demanding that the Manitoba PC Government and Manitoba Hydro stop bullying and expropriating farmers and landowners. StopHydroBullies.ca is a project of the Manitoba BiPole Landowner Committee. Please contact StopHydroBullies@gmail.com for general questions.
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BY JOHN GOUDY
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What Will NEB “Modernization” Mean for Landowners? Respect for pipeline landowners an afterthought in new government report
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he expert panel appointed by the minister of natural resources to provide recommendations on the future of the National Energy Board (NEB) released its report in May: “Forward, Together - Enabling Canada’s Clean, Safe, and Secure Energy Future.” What the expert panel’s recommendations will mean for pipeline and energy transmission line landowners is difficult to glean from the report — obviously, it’s not possible to know at this point whether the recommendations of the panel will be adopted and/or implemented. However, it doesn’t appear that there will be much of benefit for landowners in any shift to a new Canadian Energy Transmission Commission (CETC) framework. The NEB may be getting a change in name, but the CETC seems likely to be more of the same for landowners. The report includes recommendations on changes to the way in which
The NEB may be getting a change in name, but the CETC seems likely to be more of the same for landowners. various project proposals are reviewed. Without knowing how these changes will be implemented in legislation to replace the NEB Act, we can only speculate on the effect on landowners at this time. Landowners should be concerned, though, about the potential for the erosion of the procedural rights that they do have under the current legislation. The NEB Act is far from landownerfriendly, but it guarantees certain rights for landowners when faced with new project applications or the
operation of existing facilities. Will the expert panel’s clear focus on the engagement of Indigenous peoples and the general public result in the further watering down of landowner involvement in the regulatory process? The addition of a landowner ombudsman is not likely to change anything for landowners in terms of navigating the regulatory processes. The NEB already has personnel assigned to assist those affected by energy infrastructure projects and dealing with various processes. There’s mention of the possibility of funding for landowners to access relevant legal advice, but there is still no sign of any system of cost recovery for landowners who must participate in the regulatory process to protect their property interests. Government should not be (under)funding landowner legal advice and participation in regulatory processes. Energy transmission companies should be paying the costs actually incurred by landowners as a result of the companies’ projects and operations. That “Respect for Landowners” is the last section in the expert panel’s report, and consists of only four pages out of 100 in total, is telling. The impression left is that the role of landowners in the review process is an afterthought or an add-on, and that is exactly where landowners have been in the NEB process all along. Landowners should just hope that the current review process doesn’t erode what few protections they have under the existing regulatory system.
John Goudy is a litigator whose practice is focused in the areas of commercial and environmental litigation, expropriation law, energy regulation, and regulatory offences. He is particularly interested in agricultural issues and the regulation of agricultural land use. He lives and works on his cash crop farm north of London, Ont., with his wife and children.
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B Y C A E P L A S TA F F
Keystone XL’s New Lease on Life in Nebraska CAEPLA talks to Thomas Pyle, president of the Institute for Energy Research, about how TransCanada can finally get the green light for Keystone XL CAEPLA: How did things get so badly off track for TransCanada in Nebraska in the first place? What could the company have done differently to have avoided being blocked the last several years? Thomas J. Pyle: For years the keep-it-in-theground campaign focused on shutting down energy
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production but with the shale revolution, they shifted tactics to targeting pipelines. TransCanada was the first major pipeline company to get caught in those crosshairs. What we’ve learned from the Keystone XL saga is that pipeline companies and advocates for affordable energy have to treat these projects like
Facing page, Alamy Stock Photo; top right, courtesy Thomas J. Pyle
“There is a path forward for this pipeline and I think it’s important that it gets finalized... It would create jobs, deliver oil to U.S. refineries, and would strengthen America’s relationship with our strongest energy ally.”— Thomas J. Pyle
advocacy campaigns the same way that the keep-it-in-the-ground crowd does. They have to improve their outreach and communications with the people in these communities. CAEPLA: What does TransCanada need to do now to get the green light in Nebraska? What should it do differently going forward? TJP: They need to get through the permitting process in Nebraska. They have to continue to make their case to the Nebraska PSC and show that the pipeline is environmentally safe, which it is, and economically beneficial for the state and the country, which it is. The keep-it-in-the-ground campaign is a well-funded network that specializes in spreading misinformation to further their political cause. TransCanada, and really any company who faces this type of opposition, has to be prepared to fight back against misleading rhetoric. CAEPLA: How can TransCanada win over the dozens of remaining hold out landowners? How important is respecting property rights this time? TJP: They’re going to have to communicate with landowners and, of course, compensate them. Respecting property rights is paramount. They’ve tried to respect the concerns of landowners throughout the process and I’m sure they’ll continue to do so, but they have to do a better job at communicating their position. CAEPLA: Can TransCanada reboot?
Can it start over with directly affected landowners and their neighbours? TJP: They don’t need to reboot. They just need to continue working through the process. This project is almost to the finish line. As I said, TransCanada was caught off guard by the opposition because we’ve never seen such opposition to what should be a routine infrastructure project. But this is America where everyone gets at least a second chance. There is a path forward for this pipeline and I think it’s important that it gets finalized. For one, Keystone XL is really a no-brainer. It would create jobs, deliver oil to U.S. refineries, and would strengthen America’s relationship with our strongest energy ally. But on top of that, it sets a tone that these companies and those of us who support affordable energy aren’t going to stand for the misinformation campaigns that are perpetrated by the keep-it-in-theground crowd. CAEPLA: What more can TransCanada do to reassure landowners, the public, and regulators on the environmental front? TJP: Ultimately, I hope we can get back to a more sensible and honest dialogue about pipeline infrastructure. The fact is, there are millions of miles of pipelines in this country that are safely transporting our energy resources. Pipelines are a safe and environmentally friendly way to move these vital resources. That hasn’t changed.
Thomas J. Pyle is the president of the Institute for Energy Research (IER). In this capacity, Pyle brings a unique backdrop of public and private sector experience to help manage IER’s Washington, DCbased staff and operations. He also helps to develop the organization’s free market policy positions and implement education efforts with respect to key energy stakeholders, including policymakers, federal agency representatives, industry leaders, consumer entities and the media. IER is founded on the belief that history shows that private property rights, market exchange, and the rule of law have resulted in affordable energy, improved living standards and a cleaner environment.
Facing page: A TransCanada Keystone pipeline pump station operates outside Steele City, Nebraska.
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BY SEAN CORBETT
A Clear View
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n April, a cutting-edge pipeline inspection project was unveiled in Banff. Enbridge Canada and NDT Global will be partnering on the new $20 million plan. The goal is to create an inspection tool that will uncover even the smallest problems with crude oil and liquids pipelines. Slated for use by 2019, it will be Canada’s next leap ahead in pipeline fitness technology.
How will it Work? In-line inspection tools are complex pieces of equipment. They move through
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pipe walls, millimeter by millimeter. State of the art sensors search for dents, defects, metal loss, and corrosion. With this latest tool, NDT Global is looking at a major breakthrough. “We want to get to a point where we can eliminate the possibility of undetected cracking in a pipeline,” says John Fallon, NDT Global’s chief sales officer.
A Team Effort Enbridge is putting up just over a third of the cost of the project. They have a productive 15-year history with NDT Global. Enbridge often shares data with the ultrasonic pipeline inspection firm. NDT then uses this to validate tool performance and drive improvements.
“Generally speaking, Enbridge has the biggest and most complete integrity program of any pipeline operator worldwide,” Fallon says. Once complete, the new tool (called a “smart pig” in the industry) will provide vast clarity to pipeline inspection. Trevor Grams, Enbridge’s director of research and development, compares it to the bump from a 1080p TV, or standard high definition television, to a 4K TV, an ultra high definition television with four times the pixels. That clarity brings more information. And the more reliable the information, the higher the level of safety.
Alamy Stock Photo
Enbridge and NDT Global’s new pipeline inspection tool provides a higher level of safety
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B Y P I P E L I N E C O N T R A C T O R S A S S O C I AT I O N O F C A N A D A S TA F F
A Fine Balance
When it comes to environmental conservation, from Western Toads to club root protection, pipeline contractors have landowners covered
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When construction through agricultural land is required, the two most important issues are topsoil handling and weed mitigation, including club root.
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LCAC contractors, including the team at Waschuk Pipe Line Construction Ltd., take conservation of the environment seriously. Waschuk is currently finishing work on Enbridge’s Norlite pipeline project in Alberta. When completing any pipeline construction project there are many environmental considerations such as: streams, undefined drains, wetlands, weed control, topsoil preservation and wildlife protection. Whether it’s starting the project late, due to nesting birds, or a Western Toad sweep, there is an astute awareness and intention to minimize the construction impact and steward the environment into which the pipeline is integrated. Nesting birds are a major concern in summer and fall. The Waschuk team worked closely with Enbridge on this project to communicate work activity locations to the front line and plan the best course of mitigation to avoid high risk areas. A nest sweep is conducted prior to the commencement of work to ensure construction activity will not endanger any hatchlings. If active nests are found, a buffer area — anywhere from 15 metres up to 1000 metres for some species — is set up and entry is restricted in the area until the nest is clear. The current spread had a six week late start in order to
minimize impact on hatchlings and avoid shut downs during active construction. This year’s project also encountered a knot of Western Toads on the construction right-of-way. Western Toads are a species at risk, so considerable measures are taken to ensure a successful relocation. Amphibian sweeps are regularly conducted prior to access and construction. Working alongside biologists, Waschuk performed a complete isolation of the determined toad habitat on the right-ofway. Biologists then trapped, counted, and safely relocated the endangered toads so work could continue. One of the biggest concerns when building a pipeline is crossing waterbodies. Highly experienced managers, environmental consultants and construction foremen at Waschuk expertly recognize, identify and plan for the most environmentally sound and effective crossings. With years of experience, the team is well-versed in the many different classifications when it comes to watercourses — fish bearing, non-fish bearing, ephemeral streams (no water present), and undefined drainages (no bed or banks). Waschuk also designs, issues and implements a crossing plan for both vehicles and pipe that is unique for each situation. The plan is reviewed and adjusted through onsite meetings with an environmental impact. In addition,
the right-of-way is minimized to the smallest width possible for safe work conditions. Waschuk Pipe Line Construction Ltd. has a solid history of restoring water courses to natural conditions, often strengthening banks to avoid future erosion. Finally, when construction through agricultural land is required, the two most important issues are topsoil handling and weed mitigation, including club root. This must be done correctly. Every single landowner involved on the project has been contacted regarding weed prevention, machine cleaning and topsoil handling procedures. Weed cleaning stations are built along the right-of-way to reduce the spread of weeds and bleach is also used to mitigate club root. Topsoil handling is carefully tracked as well. Which ensures all topsoil is separated and the admixing of clay is avoided. The division between topsoil and clay horizons can be difficult to separate; therefore, a transition zone is developed. An extra 10 centimetres of soil is removed and stored separately. By storing it separately we may lose approximately two metres of right-of-way, but the topsoil returned is improved. At Waschuk Pipe Line Construction, the M.O. for all their employees and contractors is simple: “If this was your backyard what would you do?”
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BY STEPHANIE FRADETTE
A Failing Formula
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With energy prices down, Surface Rights Boards aren’t protecting landowners’ rights or land values ecently, in southwest Saskatchewan, there have been land agents visiting farmers requesting that they agree to reduced surface lease payments. Apparently, with depressed prices and lower production, the lease payments have become too cumbersome. As such, the landowners are being told that if they do not accept the reduced surface lease payment, then the wells will be shut in and payments will stop.
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This struck me as altogether wrong for two reasons. First, the surface lease payment formula. I’ve been told clearly by energy companies and the Surface Rights Board (SRB) that surface lease payments have nothing to do with oil and gas production or price. These conversations happened, of course, when oil was hovering in that $80-$100 range. As a side note, it’s interesting that while the energy company was asking farmers in Saskatchewan to take a third less on their surface lease payments, the same energy compa-
iStockphoto.com
Given that Saskatchewan farmland values have experienced sharp increases, the formula would suggest that most landowners should be requesting rate hikes, not accepting rate decreases.
ny found funds of more than $10 billion to buy out another energy company! Secondly, meanwhile, is abandonment. Shutting down production is not the same as abandoning a lease. Surface lease payments must continue until abandonment is complete. But the current surface lease payment formula is the primary issue. If you’ve ever had the pleasure of chatting
with a land agent, you’ve likely been informed of the complex formula that was used to calculate the lease payment that they’ve deemed suitable for your land. It includes things such as: agricultural (ag) land values, loss of use, nuisance and more. I would argue that this is an ineffective formula for several reasons (but I’ll keep it to a couple for today). For starters, ag land values should not be used to value commercial land. Ag land values are determined, generally, on parcels a quarter section and larger. Farmers do not sell off random three-acre parcels throughout their land to other farmers. It just doesn’t happen. And, in ag land sales, there is a willing buyer and a willing seller. In energy land acquisitions, there need only be a willing taker. Second, the land taken by energy companies is no longer ag land. It is industrial/ commercial land, and it is taxed as such. Lease sites are not used to grow crops. They are used for the extraction, storage, processing, shipping and disposal of oil and gas and the associated by products. Their agricultural capabilities are irrelevant. While I hope you find my arguments against the current lease payment formula compelling, the Surface Rights Board does not. Previously, at a SRB hearing, I was told repeatedly that lease payments are calculated based on ag land values and
that land use, oil/gas production and price are not factors. Their point, at the time, was that landowners should not expect increased lease payments during times of higher oil prices. This is certainly different from what landowners in southwest Saskatchewan are hearing now. Given that Saskatchewan farmland values have experienced sharp increases, the formula would suggest that most landowners should be requesting rate hikes, not accepting rate decreases. Another thing that seemed out of line in southwest Saskatchewan was landowners being told that wells would be shut in and lease payments stopped if they didn’t agree to reduced lease payments. Once again, production from a well is not related to surface lease payments. So, simply “shutting a well in” doesn’t terminate the lease. Surface lease payments are to continue until a site is abandoned. Abandonment includes the signed release by the landowner or a board order. For this to happen, notices are to be issued and processes are to be followed. Regardless of what the land agent tells you, the energy company cannot simply stop production and stop payment.
A mother of three, CAEPLA Director Stephanie Fradette farms near Lake Alma, Sask., with husband Jason.
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BY C. KENNETH REEDER
Pipelines for Peace Why supporting Canadian energy transport projects can mean fewer wars and refugees
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e generally think of the pipeline debate in terms of economy and environment, but pipelines can be a war and peace issue as well. An American diplomat once said, “If goods cannot cross borders, armies will.” If people can’t get what they need through cooperation and trade, then they must resort to violence and plunder. That is why most of history’s wars have been fought over land and resources. In the modern era we basically accept that oil and
iStockphoto.com
When Canada’s major pipeline projects get stonewalled by political interference, it’s bad for the world.
gas have something to do with many conflicts. We know why so many “strategic interests” include the Middle East and not the Congo. We can see this in Syria. The wartorn country is ground zero for clashing foreign interests. There are many layers to the conflict but one of these is competing gas pipelines. It’s nearly impossible to understand the irrationality of Middle Eastern politics, and Syria’s civil war is no different. We have a nasty secular dictator fighting a hodgepodge of terrorist-rebel factions (including ISIS, Al-Qaeda, and others). Whatever they’re fighting over, it’s a brutal struggle with no good guys to cheer for. How do pipelines fit in? The Syrian Civil War started in 2011. In 2009, Syria’s leader Assad rejected a pipeline project with Qatar and Turkey, while supporting an Iranian pipeline project through Syria. The Qatar-Turkey pipeline would have gone from Qatar’s North gas field through Saudi Arabia, Syria, and on to Turkey with future access to Europe. Qatar is a major gas producer and its rulers want to be main providers of gas for Turkey, which otherwise depends on Russia and Iran for energy. They also have their eyes on Europe, which will be thirstier than ever for natural gas imports as its own production wanes. Now here’s a question: who are the main backers of fundamentalist Sunni rebels forces in Syria? Interestingly, it is the fundamentalist Sunnis in Saudi Arabia and Qatar, with help from Turkey. Now on the flip side of this, who is
supporting Syria’s regime against the terrorist-rebels? Russia and Iran. Both are key Syrian allies. The rejected project would have been a problem for Russia and Iran’s own pipeline related goals through Syria and Turkey because they need to preserve market share and economic power. Assad reportedly said he would not sign off on the Qatar-Turkey pipeline to protect Russia’s economic interests. All this foreign interference has greatly aggravated the Syrian conflict, leading to hundreds of thousands dead and a refugee crisis that has spilled into Europe and elsewhere. When politicians point to the tragedies of Syria and tell us to open our arms and wallets for refugees, we should reflect a bit on how we can alleviate conflicts over petroleum resources. Building more energy infrastructure and exporting more oil and gas is a huge part of this. Peace isn’t created by vapid, sloganeering politicians, nor by pompous bureaucrats making sleazy deals in the halls of the UN. Peace comes through trade. Civilized people know it’s better in the long run to have economic relationships, not violent ones. People don’t even have to like each other to do business together and make deals. That is the beauty of commerce. Oil and gas are the lifeblood of modern civilization and thankfully there
is no problem of running out anytime soon. The challenge instead is actually making our abundant supplies available to those who want to buy the stuff. When Canada’s major pipeline projects get stonewalled by political interference, it’s bad for the world. It creates smaller global supply for purely political reasons. Having fewer sources of stable supply empowers the world’s bullies to leverage their economic power where supplies are constrained. This is especially true with natural gas, which was mostly stuck in its local market before the advent of LNG transportation. And so Canada’s restrictive pipeline policies will stimulate more conflict than otherwise. Some of these conflicts will be bloody and make people flee their homelands. Let’s be clear about what we’re saying here. Ottawa can’t end the Syrian civil war and solve the refugee problem just by approving pipeline projects in Canada. But increasing Canadian supply could help reduce demand for product from those who resort to instigating war to promote their exports. So, Canada can do its part for peace and win small victories by selling more oil and gas to the rest of the world. By doing so can we help ease a major source of military conflict on earth. A pretty good reason to end the political paralysis of pipelines in Canada.
C. Kenneth Reeder is a Calgary financial analyst providing mergers and acquisitions advisory services for mid-sized, privately held companies in Western Canada. He works with many clients in the oilfield services sector. He is also the editor of CanadianMarketReview.com.
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BY MICHAEL SULLIVAN
We Are All Pipeline Owners
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It’s time to celebrate Canada’s energy pipeline industry
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hen the final weld of TransCanada’s first transcontinental pipeline — the first in Canada — was completed in 1958, it was akin to the driving of the last spike of the Canadian Pacific Railway. The project faced political adversity in Ottawa and physical challenges across the Canadian Shield but in true Canadian fashion it was completed and the achievement was celebrated.
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“People were literally dancing in the streets celebrating the achievement,” said former Senior Damage Prevention Specialist Brad Watson at his recent retirement from TransCanada PipeLines after 40 years. The pipeline not only provided cheap, reliable heat in the homes of Canadians across the country but it also fueled industrial development
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For far too long, we’ve been on the defensive against Hollywood actors, musicians and even against one another with NIMBYism and the BANANA (Build Absolutely Nothing Anywhere Near Anyone) syndrome.
and economic benefits we continue to enjoy today. A lot has changed since then. Today, energy pipelines — Canadian pipelines in particular — face adversity and protest to the point where major projects are stalled forcing the transportation of hydrocarbons to their destination by other means. Canadian pipelines are governed by some of the strictest pipeline construction and operating rules in the world and the bar keeps rising. Despite that, objection towards pipelines continues and gathers steam through social media and organized protests. The bottom line, however, is that society still needs hydrocarbons and they still need to be delivered to market. A few years ago, the Canadian energy pipeline industry was dealt a heavy blow when, citing environmental concerns, the Obama Administration rejected the Keystone XL pipeline. And again, when several weeks later, the United States lifted its forty year ban on the export of oil. Looking back, the decisions appear to have been strategic and connected — land-locking Canadian oil while simultaneously making U.S. oil available for the international market. Back here at home, Canadian hydrocarbons were being labelled ‘dirty’ and as Canadians, we felt it. The world was turning against us. For far too long, we’ve been on the defensive against Hollywood actors, musicians and even against one another with NIMBYism and the BANANA (Build Absolutely Nothing Anywhere Near Anyone) syndrome.
Meanwhile, 245,000 barrels of foreign oil, at a cost of more than $12 Million, arrives in Canada every single day from countries with brutal human rights and virtually non-existent environmental governance. That’s more than four billion dollars leaving our country every single year when we have oil right here in Canada that simply needs to make its way to a refinery. So, what happened? How did the glory of achievement sixty years ago turn upside down? Shouldn’t we be proudly and boldly defending Canadian pipelines? Don’t we, as Canadians, benefit from pipelines and the hydrocarbons they transport? Aren’t we all, in that sense, pipeline landowners? Yes, we are.
Pendulums swing. Tables turn. Technology advances. Evolution continues. Canada has a great deal to contribute to the world. New pipelines will reduce Canada’s dependency on costly foreign energy, and while it might appear contradictory that new pipelines delivering hydrocarbons to world markets will reduce the global effects of climate change, that is likely the case. Global demand for energy is increasing yet few governments can afford the incentives towards renewable energy — and because of that, reliable and ethical
oil and gas from Canada offers the world a reliable and responsible choice. It is still very early in the age of renewable energy. While the shift among first world countries’ energy ideologies has clearly begun, the day when renewable energy will displace hydrocarbons worldwide remains blurry against the horizon. But supporting the oil and gas industry and pipelines doesn’t mean we are ignoring the future. It simply means we are recognizing their place, advocating their safety and pacing advancement toward a more renewable future. As Canadians, we are blessed with both a rugged and prairie landscape where landowners and pipelines responsibly and respectfully co-exist and our ability to contribute to and shape governance of the same is welcomed. It’s time we stood-up again for pipelines and proudly celebrated Canada’s energy leadership in extraction and transportation, our dedication to environmental and climate governance, and underlined Canada’s distinguished commitment to safety. In the immortal lyrics of Woodie Guthrie, “This land is your land. This land is my land” and we are all stewards of the land. Supporting responsible pipeline operations and holding the industry and our government accountable for the same is nothing to be ashamed of. In fact, it is something of which Canadians should be boldly proud.
Mike Sullivan is the president of Alberta One-Call Corporation and executive director of the Canadian Common Ground Alliance.
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BY JÃœRGEN M. KOHLER
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Strength in 22
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n Numbers A Manitoba property rights activist on the Land Values Appraisal Commission process, understanding “injurious affection” and landowner solidarity
I
am writing to share with you my recent experiences with the Land Values Appraisal Commission (LVAC) process — a road we may have to go down if we are not successful in getting Manitoba Hydro to the negotiation table in regards to the BiPole III expropriation. But before the BiPole III boondoggle, there was the “Red River Floodway Expansion Project” the Province of Manitoba initiated in September 2008. On February 26, 2009, the Province informed me that they would expropriate land from me for the Red River Floodway
West Dyke Expansion project — also known as the Z Dyke. Just like Manitoba Hydro did in the case of BiPole III, the province gave me a lowball offer back in April of 2009 hoping I’d settle quickly. I refused their offer and made my formal application to the LVAC on May 17, 2010. You may be surprised to find out that after eight years since the floodway expropriation, the province only now appears to be seriously interested in settling the matter with me without going to a LVAC hearing.
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Take Note:
Don’t let your lawyer pressure you to set down a date for an LVAC hearing on BiPole III. The “injurious affections” from BiPole III are extremely complex which makes the selection of a qualified expert even more important. Especially because once you are at a LVAC hearing you have no choice but to accept their decision. There is no chance of appeal as the LVAC ruling is final.
All this information may seem overwhelming to you. If that is the case, you are not alone — it took me eight years to get my head wrapped around this.
The author at his property in Manitoba.
Why am I sharing this information with you? First and foremost, to let you know the truth about the LVAC process that lawyers are not telling you. I have heard of some landowners being misled by both their lawyers and Manitoba Hydro that LVAC will be a quick process and that it will provide you with fair compensation for BiPole III. That is simply not true. You are being completely misled. I am speaking
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from personal experience when I tell you that LVAC is a very complex and open-ended process. I have been dealing with LVAC for eight years now on the floodway expropriation which alone shows it is not a quick process — unless of course you’re willing to accept their low-ball offers. Second, when it comes to LVAC, the simple fact is that the longer we hold out the better a settlement we will be
able to negotiate in the end. Third, when it comes to the LVAC process, there is strength in numbers. Even though there are just four of us landowners still holding out on the floodway expropriation, we have been learning a great deal from each other, especially when it comes to the meaning of “injurious affection” and how it can be applied to our individual farm operations under the Expropriation Act.
Here is what Section 30(1) of the Expropriation Act states: INJURIOUS AFFECTION IN PARTIAL TAKINGS 30(1) Compensation for injurious affection where an authority expropriates part of the land of an owner shall consist of the amount of (a) any reduction in market value of the remaining land of the owner caused by the expropriation of the part; (b) the damages sustained by the owner as a result of the existence and the use but not the construction of the works upon the part of the land expropriated; and
Photo courtesy, Jürgen Kohler
(c) such other damages sustained by the owner as a result of the existence, but not the construction or use, of the works as the authority would otherwise be responsible for in law if the existence of the works were not under the authority of a statute.
As you can see, “injurious affection” as set out under the Expropriation Act is a very complex concept with several components to it in terms of how it applies to a farm operation now impacted by the existence of a power line. For example, the first component, or 30(1)(a), provides a landowner a claim for compensation for the reduction in the market value of the remaining land that is negatively impacted by the existence of the transmission line. The fact is that until the line is removed, it will have a negative impact on the land’s value, which is an economic loss. In regards to 30(1)(a), I have recently been made aware of a very im-
portant court case in Alberta regarding injurious affection compensation for the negative economic impact on the remaining land. [Editor’s note see p.30 “What Remains: Expropriation Also Impacts the Value of Land Not Taken”, by John Goudy] The decision will inform you so that you can start to think about the negative economic impacts a power line, such as BiPole III, will bring to your and your neighbours’ property. The second component of “injurious affection”, or section 30(1)(b) under the Act, provides you the right for a claim for compensation for the financial costs you suffer from working around the BiPole III towers. Your operation will be facing increased costs due to restrictions regarding aerial spraying, changes to your farming practices, loss of GPS signal, increased liability issues and the reduced value of the land on the easement. The third component, or section 30(1)(c) provides the right to claim for other damages that may be unique to your particular farming operation. All this information may seem overwhelming to you. If that is the case, you are not alone — it took me eight years to get my head wrapped around this in the case of the land that was expropriated from me for the Z Dyke. My intent is not to overwhelm you but rather to point out the complex nature behind “injurious affection” compensation.
So now you may be thinking how do I best deal with this? In the case of the floodway expropriation, I have learned that qualified expert reports become extremely important during the expropriation proceedings under LVAC. This will be even more important in the case of the BiPole III project as there will be many unforeseen operational and legal liabilities that will be imposed on us.
Finally, and perhaps most importantly, don’t let your lawyer pressure you to set down a date for an LVAC hearing on BiPole III. The “injurious affections” from BiPole III are extremely complex which makes the selection of a qualified expert even more important. Especially because once you are at a LVAC hearing you have no choice but to accept their decision. There is no chance of appeal as the LVAC ruling is final. Over the past three years Manitoba Hydro has used the ‘divide and conquer’ tactic to get landowners to sign their flawed BiPole III easement agreement. And the Pallister PC government has done nothing to give us a fair deal. In fact, they have shown that they are even worse than the NDP. At least the NDP didn’t hide the fact that they didn’t care about us. But “lyin’ Brian” and “betrayin’ Blaine” only pretended to care long enough to get into power. Now they couldn’t care less about us. When it comes to LVAC, we will have to face the Pallister PCs directly, not Manitoba Hydro anymore. And the Pallister PCs sure have shown their true colours since the April 2016 election, haven’t they? And so it will be even more important to regain solidarity among all landowners impacted by BiPole III, regardless of whether you’ve signed an easement with Hydro or whether you are still holding out for negotiations. The more of us that can come together again and rally behind one expert and one lawyer, the more leverage we will have when it comes to negotiating with the province under the LVAC process.
Jürgen M. Kohler farms near Brunkild, Man., and is chair of The Manitoba BiPole Landowners Committee (MBLC), a CAEPLA affiliate. Jurgen can be reached at jurgen.kohler84@gmail.com
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BY AMANDA ACHTMAN
Private Property Rights Matter Failing to prosecute anti-pipeline protestors for trespassing threatens the common good
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When the state via law enforcement fails to enforce the law, politicians and police send the message that activist stunts trump private property rights.
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N
ebraska Governor Pete Ricketts is bracing for protests in the next phase of hearings on Keystone XL. Following protests surrounding the Dakota Access pipeline (DAPL), Ricketts said, “There’s certainly going to be people in Nebraska with legitimate concerns about the pipeline and they’ll want to express those, but if we have people coming in from out-of-state, those are the ones that can end up being dangerous. They really don’t care about the local Nebraskans. They’re there for a political agenda.” Throughout North America, it is increasingly crucial to clarify to the public that landowners almost always do not belong in the same category as environmental protesters. In fact, when the latter commit criminal acts and illegal stunts, they make themselves enemies not only of the legitimate stakeholders who are trying to conduct business professionally and legally, but also of the very environment they purport to defend. For this reason, it is disturbing that authorities recently dropped 33 charges against DAPL protesters — most of those charges related to criminal trespassing. When the state cannot be expected and trusted to uphold private
property rights against hooligans, then what is to prevent the state from eventually trampling these same rights themselves? The same thing happened a few months ago in Canada. Three women manually shut down Enbridge’s Line 9 pipeline. They faced charges of mischief over $5,000 and mischief endangering life. They also risked facing prison time. The charges were dropped, though, after the women agreed to keep the peace and stay off Enbridge property. They were unremorseful for endangering life, with one of the women telling media, “I knew we did the right thing.” In February, two protesters had to be removed from Florida’s Sabal Trail pipeline into which both had crawled. In the same area, just one week later, a man fired a rifle at a pipeline under construction. And, that same month, in North Dakota, the last DAPL protesters to leave set fire to the site in a “departure ceremony.” Two children suffered burns from the recklessness. Why media continue to describe these very crimes as “civil disobedience” and “peaceful” is baffling. When the state via law enforcement fails to enforce the law, politicians and police send the message that activist stunts trump private property rights. The difference between landowners and criminals is, of course, not just a matter of tactics but of fundamental principles.
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“Moral hazard is a prime example of common-sense economics at work. Being able to impose the costs of your action on others, without their direct consent, provides a powerful incentive to act in ways you normally wouldn’t. A classic case of moral hazard is fire insurance, which reduces the incentive for insured people to avoid fire by imposing certain costs on the insurance company.” — Matthew McCaffrey
All people of good will who understand that property rights are a core tenet of liberal democracy can distinguish between the real stakeholders and obnoxious meddlers. This principle is incumbent upon all of us to defend, even while the actual business negotiations at any given time and for any given project rest strictly and fundamentally with those directly involved. We can see the stupidity of protesters who reportedly want the “state regulatory process in Nebraska to delay or block the project.” The purpose of a regulatory and legal process is for due consideration of all interests and stakeholders, not a circus of stunts and distractions from business negotiations. Such activists
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would like to make themselves the beneficiaries of bureaucracy. This is how the regulatory regime itself is increasingly becoming anything from a poor substitute for property rights to a downright threat to them. As socialism makes everyone equally poor, the democratization of stakeholders purports to make everyone equally invested. But this is a fiction. Not everyone has an equal stake in pipeline projects. And the reality is that only the true stakeholders will bear the brunt of the consequences for the risks and decisions of companies and governments. Matthew McCaffrey, assistant professor of enterprise at the University of Manchester, explains, “Moral hazard
Amanda Achtman is a CAEPLA contributor. She holds a BA in political science and is currently pursuing an MA in philosophy.
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Moral Hazard
is a prime example of common-sense economics at work. Being able to impose the costs of your action on others, without their direct consent, provides a powerful incentive to act in ways you normally wouldn’t. A classic case of moral hazard is fire insurance, which reduces the incentive for insured people to avoid fire by imposing certain costs on the insurance company.” When it comes to property rights, we see this structure of moral hazard. When governments invite industry to externalize the costs and consequences of their decisions on landowners and farmers, politicians become far more audacious with others’ property than they would ever be with their own. This leads us to wonder: If Keystone XL still faces obstruction from activists for a project now enjoying the backing of the White House, how might TransCanada’s Energy East fare in Quebec and how might Kinder Morgan’s Trans Mountain fare in British Columbia? Will one or both ultimately wind up the same way as Enbridge’s Northern Gateway, a project that perished not on its merits but on the efforts of anti-pipeline activism? Pipeline executives ought to find allies in local landowners through conducting mature, professional, and respectful business negotiations. It is, in fact, a moral responsibility for companies to forego expropriation and resist collaborating with governments in this moral hazard which threatens the common good that property rights have been enshrined to protect. After all, is a well-proven paradox that private property is the best guarantee of a universally free society.
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BY JOHN GOUDY
What Remains Expropriation Also Impacts the Value of Land Not Taken
A
ltaLink expropriated a rightof-way over a strip of land from an Alberta couple for an electrical transmission line. In a compensation hearing before the Alberta Surface Rights Board (the “Board”), the owners were denied compensation for “injurious affection.” The injurious affection they claimed was a loss in value of the remainder of their property that was not taken by AltaLink. The owners appealed the Board’s decision to the Alberta Court of Queen’s Bench and, on appeal, the Court reversed the decision of the Board and awarded the owners $125,780 in lost value plus interest. The land in question consisted of two adjacent parcels containing approximately 230 acres, of which approximately 121 acres were cultivated. The owners had purchased the land in February, 2013 for $511,500, and they were aware at that time that AltaLink had received approval from the Alberta Utilities Commission to construct and operate the transmission line across the property. Prior to the purchase of the property, the new owners had rented the property for approximately 27 years, and it appears from the decision that they were able to purchase the property at below market value. The Board found that the market value at the time of the expropriation in 2014 (the date of valuation for the purpose of calculating
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compensation) was somewhere between $902,000 and $930,000. The owners argued that the taking of the right-of-way resulted in a loss of value to the balance of the property that was not taken as right-of-way related to the presence of the right-ofway and the transmission line. They argued that their loss was not limited to the loss of value to the land as they were currently using it, but should be calculated based on their loss of ability to subdivide the property for new residential lots. But for the AltaLink rightof-way, the owners could subdivide and sell the individual lots. They put the value of their loss at 30 per cent of the market value of the property. The Court disagreed with the owners that the right-of-way would prevent the development of multiple residential lots, but accepted that the right-of-way would result in a loss in the value of the lots that could be created. On that basis, the Court would have calculated the compensation to be paid to the owners based on a market value loss of 15 per cent (half of the 30 per cent proposed by the owners), or approximately $131,000. The Court then ended by making a finding that the $125,780 that would have been awarded by the minority dissenting member of the Board (in the original hearing) was therefore reasonable and set compensation at that amount. Taken on its own, the Court’s ruling
on loss of value to the remainder of the property based on loss of value of prospective subdivision lots is not remarkable. However, what is noteworthy is the Court’s rejection of AltaLink’s argument that no injurious affection compensation was payable at all because the market value of the property never fell below the amount
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The payment for injurious affection is based on the impact on the value of the remaining land, not the impact on the financial position of the owners. the owners paid for the property. AltaLink argued, and the majority of the Board had agreed, that an award of injurious affection would result in a windfall for the owners because they had paid substantially less than market value for the property. But the Board had incorrectly “focused on the financial loss to the
landowners and not the loss in value of the remaining land ... they were suspicious that the negative impact of the transmission line had already been factored into the sale price.” The Court ruled that “the fact that the Appellants purchased the land after the Respondent obtained a permit and license to build the line is of no conse-
quence. The payment for injurious affection is based on the impact on the value of the remaining land, not the impact on the financial position of the owners. This does not result in a windfall or unjust enrichment to the Appellants because, until the line is removed, it will have a negative impact on the Land’s value, which is an economic loss.”
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BY TIM MOEN
Collectivism Poisons Pipeline Prosperity Why does everybody get a say on whether a pipeline gets built?
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The idea that “we” get to decide whether a pipeline is built brings all sorts of “stakeholders” to the table that have zero ownership claim on land and property where the pipeline is going.
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J
ustin Trudeau recently killed the Northern Gateway pipeline much to the disappointment of over 30 First Nation bands that were looking forward to the prosperity that would accompany having a pipeline crossing their property. Why did Ottawa make this announcement? Why aren’t we hearing from Enbridge about what really happened? How is it a political whim determines which pipelines live and which die, instead of allowing projects to compete and appeal to landowners on their merits? The answer to this lies in Trudeau’s announcement that Kinder Morgan was going ahead while Northern Gateway was dead. “The Kinder Morgan pipeline will triple our capacity to get our product to market,” Trudeau said. Did you catch it? It’s such a subtle and ingrained part of our psyche that it’s almost imperceptible. “Our.” What makes this product “ours”? Did Trudeau or any other Canadian go and get that oil out of the ground? Did they risk their personal capital, their livelihood, their lives to bring a product to market? How the heck do “we” consider this product “ours”? This product belongs to the men and women who go and get it. Western Civilization was founded on the philosophy that the state is there to protect the individual not impose upon the individual. Yet here we have the federal government, with no pushback
whatsoever from capitalists, calling a product extracted and refined by individuals other than themselves “ours.” This collectivism infuses every part of the pipeline process. The idea that “we” get to decide whether a pipeline is built brings all sorts of “stakeholders” to the table that have zero ownership claim on land and property where the pipeline is going. First Nations are treated as one homogenous blob rather than as a group of diverse individuals with different goals and desires and so it is proclaimed that the “indigenous people” don’t want a pipeline. Our prosperity is not dependent on a particular pipeline getting built or another pipeline being prohibited. Our prosperity was built on a framework of property rights and respect for the individual — and collectivism undermines this. If my great-grandfather who narrowly escaped Stalin taught me anything it is that we nationalize the means of production at our own peril. Imagine if a pipeline company was able to negotiate with property owners free of government interference? Clearly the pipeline company might have to work a bit harder to find a winwin solution for a few stubborn holdouts, but surely that would be a cheaper alternative than having to spend half a billion dollars seeking governmental approval only to have your project axed. Surely both the pipeline company and the landowners would be better off not having collectivist insanity hanging
over their heads and having their individual interests hinging on the opinions of people other than themselves. People who have nothing invested in their lives but who can ruin those same lives and their chance to pick themselves up out of poverty simply by registering a casual opinion. One grain of hope in this madness are the people who are using collectivism against itself. Dave Tuccaro, from the Fort McKay First Nation, made his millions from oil and gas. And he smells opportunity. I spoke to him a few of years ago at a conference and he told me that he is planning to succeed where Enbridge has been obstructed by government. Mr. Tuccaro senses an opportunity for an aboriginal owned and operated pipeline company to negotiate its way through the Northern Gateway route. [editor’s note: Enbridge had offered significant ownership opportunities to directly affected First Nations.] It is going to be hard for a government that sees First Nations as a collective blob to say no to a First Nation company. I wish Mr. Tuccaro luck with his Eagle Spirit Energy Holdings initiative. We will all be better off if he is successful at turning collectivism against itself and exposing its corruption of Canadian society and economy. Tim Moen grew up on a farm in northern Alberta. Leader of the Libertarian Party of Canada, Tim is also a public speaker, filmmaker, businessman, and a firefighter/paramedic.
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BY MICHAEL SIDHU
Incentivization Instead of Expropriation Could tax breaks encourage landowners to partner in energy transport projects?
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F
ollowing the Liberal government’s approval of the Trans-Mountain pipeline in November 2016, various interest groups have certainly dug in their trenches vocalizing their opposition. While I agree with the need to safely transport bitumen from Alberta to B.C., there is also room for environmental concerns to be heard. I can see both sides of the moral argument. Even though I drive an efficient car, I am still dependent on getting black gold out of the ground. But how government awards industry the “right” of entry to private land to gain access to an expropriated easement is something that needs revisiting.
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Is there another way? The problem is that the provincial and federal governments receive billions of dollars in oil royalties and other taxes every year and therefore have a vested interest in the industry. Until green technology surpasses the use and economic utilization (and more importantly the viability of tax revenue) of the oil and gas industry, our governments are dependent on these resources. Even with this dependence, the free market should continue to encourage entrepreneurs with green initiatives, rather than wielding the sword of legislation.
The realities:
1
All levels of government depend on revenue, generated through taxation.
2
The royalties collected from the energy and energy transport industries are one of the juiciest sources of tax. This happens at the industry level with oil and gas royalties, corporate income tax, and other fees. At the consumer level, it occurs with gas tax, transit taxes, income tax from employees and contractors in the industry.
3
Regardless of the morality issue of oil posed by environmentalists, pipelines continue to be safer than alternate methods of transportation, such as rail or truck.
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Governments want oil out of the ground, based on their need for tax income.
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Governments have the ultimate power of creating easements through expropriation of land. Even though property seizure and unreasonable searches are prohibited under protections granted in the Charter of Rights and Freedoms, there is no protection from expropriation or imposing right of entry. If you’ve ever thought you actually own your land outright, perhaps you should attempt to skip a few years of paying your property taxes — let me know how that goes for you.
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Even though property seizure and unreasonable searches are prohibited under protections granted in the Charter of Rights and Freedoms, there is no protection from expropriation or imposing right of entry.
How the current system works The current system of payments for easement agreements is fundamentally biased against the landowner. In any contract, there must be equal consideration for a contract to be valid. And in the free market, the exchange of goods or services is done through a mutual exchange of values. In the case of land use, the landowner must willingly exchange the use of his land for a satisfactory payment. The practise of granting a single lump sum, lowball payment following expropriation or the threat of same, should be reconsidered. The single, one time payment constitutes a binding agreement to the use of the landowners’ property even if there is a disagreement between the landowner and the company. In the event the landowner disagrees with the valuation offered, the involved parties have option for action. On one hand, the National Energy Board has the power to order a right of entry. On the other hand, the landowner can seek arbitration, but like most individuals considering taking action, the costs of doing so are often prohibitive. According to the Natural Resources Canada website, neither the minister nor the arbitrator can award settlement costs. How many people have decided to throw in the towel before they ever begin? This is effectively expropriation when the private landowner has no alternatives but to accept the easement at the value offered.
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Knowing that all levels of government want royalty income, knowing that shareholders demand return, and knowing that landowners should have an equal say in the process, what alternatives exist to balance out these sometimes conflicting interests? How can you promote fairness in a process where the “independent” arbitration process is run by the same entity earning the revenue from the process?
Are incentives the answer? Economists of the Austrian School would suggest that the only way to decide who is right in a situation of competing values is to consider the rightful ownership of property. Whoever is the owner of property has the final say and can make the final decision. In the current process, the final decision is granted to the Crown, as the Crown is the true owner of the property. Given that property rights are not granted the same status as other western countries, and certainly not under the Charter of Rights and Freedoms, this is something that all Canadians should remember.
One possible solution lies in providing new and different incentives for landowners facing easement decisions. These could come in the form of tax incentives or credits on the portion of the land granted. Executing a tax credit strategy is easily accomplished. For example, a farm credit decreases municipal tax, and any tax incentives provided for easements could be implemented in the same manner. Credits and deductions could be done at the municipal, provincial or federal level. Incentives could also be in the form of royalty income in the same way the governments are paid on the volume of extractions. The pipeline companies can pay a certain rate per measured flow of bitumen that could be granted an offsetting tax credit or deduction to create tax preferred income for the landowner. The energy transport company could sign guaranteed or nonguaranteed renewable lease agreements on the land used. Of course, as with any form of free-market exchange, the interests of all competing parties must be addressed.
Michael Sidhu is a recovering banker who lives in B.C. with his wife and business partner, Marena, and three children. Michael’s experience in the financial industry includes investments, insurance and mortgage banking. He earned his CFP designation in 2005, the FMA designation in 2007, and the RCIS designation in 2017. In 2016, Michael earned his Infinite Banking Practitioners Certification through the Nelson Nash Institute. After banking, Michael discovered Austrian Economics and the writings of dozens of authors on the topic.
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B Y P I P E L I N E O B S E R V E R S TA F F
The Fox in the Henhouse Pipeline Observer: The National Energy Board (NEB) recently announced its “Landowners Guide to Land Acquisition.” What do we know about this “guide,” and is the NEB really the best place for landowners to get this type of information? Dave Core: It is, if you are suffering from Stockholm Syndrome (laughs). My point is it’s like hostages identifying with their kidnappers. Which is a bit ridiculous. But that is the system landowners are up against in this country, at least where the NEB is involved. The majority of the committee that crafted the guide was made up of regulatory, industry, government and other special interest groups that rely on bureaucratic administrative law and regulations for their income. A few landowners
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were invited in an attempt to provide some credibility or legitimacy to the process. The Board is in a conflict. The NEB mandate is not to act on behalf of landowners. It is a facilitator, a regulator and pretends to be an ombudsman for landowners. In reality, no regulator can pretend to be unbiased acting in these three roles, and provide landowners credible legal advice on how to best protect their interests while taking part in processes designed to expropriate landowner negotiation rights. PO: Why do you say the NEB is in a conflict? DC: The Board is in all kinds of conflict. The biggest one being that the NEB claims to be an unbiased regulator, adamant that it has nothing to do with the private
contractual easement agreement or the compensation paid to landowners. But this is simply not true since its regulations take away the right of landowners to negotiate a fair real estate agreement, on a level playing field. The Board’s “land acquisition” process is based on the power of expropriation, but it won’t come right out and admit it, certainly not in this “guide.” The Board also claims to serve industry, government, and the public, including environmentalists. So there is a political conflict too, as it [the NEB] tries to be all things to all people implementing an agenda that is often in conflict with both industry and landowners. PO: The Board is also claiming this guide was created with input from landowners. Is this true, and did CAEPLA participate?
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CAEPLA CEO Dave Core on why you can’t trust the NEB’s latest advice
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“This is a proverbial fox in the henhouse scenario. Companies don’t expropriate anybody. Government does. They simply take our land and redistribute it.” — Dave Core
DC: This is very much a guide for, by, and about bureaucrats and other self-interested people, not landowners. CAEPLA agreed optimistically and perhaps naively to participate in this Land Matters committee, but in the end, the Board did what it always does — which is disrespect and ignore landowners. It claims it was supported by landowners when in fact knowledgeable groups like CAEPLA, (both I and Gerry Demare from our member association Manitoba Pipeline Landowners Association) did not support the basis for this new guide and refused to endorse it. We continue with our position that the NEB should not be in the land acquisition business. PO: The NEB is claiming this guide is a resource for landowners and admits that a right of entry order can be imposed on landowners. How can landowners trust the advice the NEB is giving them when its role as expropriator is creating the problems it's claiming to solve?
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DC: That’s just it — this is a proverbial fox in the henhouse scenario. Companies don’t expropriate anybody. Government does. They take our land and redistribute it. And then profit from the projects they are approving and taking our land for. It’s part of the conflict I mentioned earlier. It is this kind of deception by the Board that really brought CAEPLA into being. We base our services to landowners on a recognition of their property rights — the Board throughout its existence has been trying to replace property rights with endless bureaucratic processes that have never served landowners and in the end really don’t serve anybody, except maybe the bureaucracy itself. PO: What are the takeaways for landowners following the release of this so-called guide?
DC: As G.J. Tucker said, “No man’s life, liberty, or property, are safe while the legislature is in session.” I would substitute “NEB” for government in that quote. “Buyer Beware” is another takeaway. Landowners need to remember a few things: The fiduciary duty of land agents is to the company, as it should be. Board lawyers can serve only the Board, and as I’ve said the Board has multiple layers of conflict. And the worst conflict is the ultimate expropriating authority pretending to advise landowners on a process based on the threat of expropriation. It is ludicrous. This guide is flawed as much by what it doesn’t tell you about the liability, risks and costs its processes impose on you, as it is by the misleading and unavoidably biased information it does give you. CAEPLA has worked with landowner groups across Canada to negotiate business agreements on pipeline and powerline projects to counter regulatory expropriation and risk imposing regulations. We have successfully negotiated many, many business agreements that have raised the bar on pipeline construction methods, property damage prevention, environmental stewardship, pipeline safety and have negotiated precedent setting land compensation agreements by having landowners work together to counter the NEB threats of expropriation and intimidating regulatory processes. The bottom line is, if you want to understand how the NEB land acquisition process really works, forget this “guide.” Give CAEPLA a call.
Dave Core is founding president and CEO of the Canadian Association of Energy and Pipeline Landowner Associations. Dave has been active in the pipeline landowners movement for nearly three decades.
BY ANNETTE SCHINBORN
Facing page and this page: iStockphoto.com
Meeting of the Minds
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The CAEPLA Enbridge Workshop Series continues to bring peace of mind to landowners
AEPLA has worked with and on behalf of landowners for at least a couple decades. Before that, the roots of CAEPLA can be found in the work of Peter and Jean Lewington and Stuart and Jocelyn O’Neil who “mortgaged their farms and families’ futures in the best interests of all Canadians” to protect their farmland as recorded in the Summer 2016 issue of the Pipeline Observer article “The Book that Inspired the Creation of CAEPLA.”
Other landowners followed after in the forming of landowner associations such as the Ontario Pipeline Landowner Association (OPLA), GAPLO and the Manitoba Pipeline Landowners Association (MPLA) who came together to form CAEPLA, the national association representing landowners from coast to coast. CAEPLA was founded by landowners, for landowners and is all about landowners. As such it has always recognized the importance of landowner stewardship responsibilities and how that relates to protecting the environ-
ment, the productivity of the land and safety issues. Face it, your land is your greatest investment and for most of you, your livelihoods. Equipping yourself with knowledge is important in protecting that investment. With that in mind, CAEPLA initiated its first-of-a-kind workshop series in Western Canada in the fall of 2015 and in Ontario the following spring. This first series discussed crossing issues and the Enbridge Crossing Tool and App. In Ontario we also included
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— CAEPLA landowner member
a discussion on the recent shutdowns of valve sites by anti-pipeline activists, featuring a discussion on security — what Enbridge was doing to protect valve sites, how this affects your land and safety, as well as looking at biosecurity risks posed by trespassers. The feedback from the inaugural series was very positive so we followed up with another workshop series this spring, once again on topics that directly affect landowners with Enbridge pipelines on their property. The topics addressed this time were biosecurity and integrity digs. In the “win, win” business agreement on the Enbridge Line 3 Replacement Project (L3RP) negotiated between CAEPLA, MPLA (Manitoba Pipeline Landowners Association), SAPL (Saskatchewan Association of Pipeline Landowners) and Enbridge back in December 2015 and unanimously ratified by landowners in February 2016, a precedent-setting biosecurity protocol was negotiated, too. “[This] agreement establishes a new standard for the identification and mitigation of clubroot biosecurity risks for landowners concerned about the introduction and spread of pathogens to their property as a result of pipeline and hydro transmission development…”
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(From the article “Controlling Biosecurity Risks”, Autumn 2015 Pipeline Observer.) Understanding that these topics are top of mind for landowners, Enbridge spoke on the biosecurity protocols in the Agreement and how it will be carrying them out, both during the construction of L3RP as well as on every integrity dig conducted going forward. As advertised, these workshop series are “Talks for, by and about landowners.” The format is a relaxed atmosphere. Landowners can ask questions during and after the presentations, as well as go one-on-one with both Enbridge and CAEPLA reps. During each of the sessions, held in Brandon, Man., Outlook, Sask., and Ilderton, Ont., there was no shortage of lively discussion. Productive exchanges took place including and especially between landowners themselves, over coffee and a delicious full course hot lunch. The saying that “knowledge is power” is very familiar. But knowledge also can
bring peace of mind and relieve anxiety when you have a deeper understanding of an issue. This was the takeaway expressed by most of the landowners attending the workshops. Having both Enbridge and CAEPLA together in the same room to answer their questions created a lot of consensus and confidence. And not only did landowners get their questions answered, key members of the Enbridge team also left with a greater understanding of why these issues are so crucial to the livelihoods and operations of the farmers present. Said one longtime landowner member attendee, “These workshops are very informative and positive. The format of these workshops is great as it encourages open participation of both landowners and Enbridge. Having both CAEPLA and Enbridge together in the same room answering questions gives us more confidence in getting our concerns addressed.” As another landowner put it, “Kudos to CAEPLA in organizing these workshops and having their lead staff present to answer questions. It is very rare to have such experienced and committed individuals take the time to attend events like these and share from their experience. Thanks also to Enbridge for explaining the processes taken to protect our biosecurity concerns, the processes of integrity digs and developing a respectful relationship with landowners.” Communication is key to any relationship. Getting passionate and principled pipeline landowners together to share ideas and a meal with the best minds in industry is what CAEPLA’s Workshop Series is all about — see you at the next one!
Annette Schinborn is COO and director of Landowner Relations at CAEPLA. Before joining the team at CAEPLA, Annette worked with grassroots nonprofits including the Canadian Taxpayers Federation, the Prairie Centre and the Western Canadian Wheat Growers Association. She has worked closely with farmers, ranchers and other landowners on issues such as tax and agricultural policy and now energy transport and property rights.
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“Having both CAEPLA and Enbridge together in the same room answering questions gives us more confidence in getting our concerns addressed.”
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Enjoying the ride. We didn’t convince your best friend to go on an adventure. Or cross something off your bucket list. But we did fuel the road trip that reminded you that you’re only as old as you feel. When the energy you invest in life meets the energy we fuel it with, exhilarating moments happen.
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