In the recent decision of the B.C. Surface Rights Board in Encana Corporation v Perry Burl Piper and Leslie
Lancelot Dowd, the Board awarded compensation to landowners
less than the amount previously offered by the operator. In doing
so, the Board adopted the principles for landowner compensation
under the Petroleum and Natural Gas Act articulated
earlier this year by the B.C. Supreme Court in Progress Energy
Canada Ltd v Salustro, 2014 BCSC 960. As discussed in a
previous post, Progress clarified that the onus is on
the landowner in a rent review hearing to adduce evidence of
ongoing prospective loss.
In Encana, the landowners sought an increase in the
amount of rent payable by Encana for surface access in relation to
the operation of several gas wells and pipelines. Drawing from
Progress, the Board maintained as follows:
All rent reviews must, as a starting point, take into
consideration the compensation factors outlined in the
Act. Compensation should be awarded according to the loss
or damage attributable to an operator's use of the land and
cannot be evaluated simply on a per acre basis.
Board decisions must be made in light of evidence demonstrating
actual or reasonably foreseeable loss or damage suffered by a
landowner for any adverse effects brought about by occupation of
the land. The obligation is on the applicant seeking review to
tender such evidence.
The Board operates in an administrative review context governed
by the Administrative Tribunals Act. A Board decision may
be set aside if there is insufficient evidence to support it.
After undertaking an analysis of the compensation factors listed
in the Act, including comparable Encana leases, the Board
found that the landowners were in fact being overcompensated. As a
result, the Board awarded compensation less than that offered by
Encana and ordered the landowners to remit the amount of the
resulting overpayment to Encana. The Board explained that it was
constrained by statutory guidelines and that the landowners had
failed to provide any relevant evidence that the Board could rely
on in their favour.
Going forward, it can be expected that the Board will continue
to endorse the principles set out in Progress to require
an applicant for rent review to adduce evidence demonstrating the
degree of loss or damage that the landowner will suffer according
to the factors set out in the Act.
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