Canada: Alberta Surface Rights Board Issues Decision In Significant Transmission Line Hearing

  • The Alberta Surface Rights Board (the "Board"), recently issued its decision Montana Alberta Tie Ltd. v Baczuk, 2014 ABSRB 566 (the "Decision" found here) in relation to the compensation of landowners affected by the construction of the Montana Alberta Tie Line operated by Montana Alberta Tie Ltd. ("MATL").  The Decision's noteworthy findings include:
    • Subsection 8(3) of the Alberta Surface Rights Act (the "Act") and section 4 of the Public Inquiries Act cannot be used by the Board to order pre-hearing document production, unless a witness is also summoned.
    • In considering compensation for transmission lines, the Board will not place significant weight on comparables from the oil and gas sector and prefers transmission line to transmission line comparables; and will only compensate landowners on the basis of grounded structures, such as towers, and not conductors overhanging lands.
    • Where construction of a project is delayed for an extended period of time, or where construction is protracted, the Board may award more than the typical one year of general disturbance compensation; and
    • The Board will not award damages for an Operator's non-compliance with an order, unless that non-compliance also results in provable damages.

The Decision

MATL is a 345 kilometer, 230 kilovolt international transmission line originating from a tie-in near Lethbridge, Alberta and terminating in Great Falls, Montana.  MATL's final permit and licence were issued in August 2008 and unsuccessfully appealed in 2009.  After various amendments and extensions, construction of the project began in December 2010.  Construction was interrupted in the summer of 2011 when the current owner of MATL acquired the project's original owner.  Construction resumed in January 2013 and commercial operation commenced on September 18, 2013.   

As a preliminary matter, the Board dismissed an application by some objecting landowners seeking an order directing that MATL provide certain documents, which allegedly supported MATL's initial offered compensation amount.  The Board considered subsection 8(3) of the Act and section 4 of the Public Inquiries Act and held that the Board only has the ability to order the production of documents in the context of summoning a witness. 

The Board further held that the objecting landowners were entitled to an initial payment of $1,300 per acre, $7,500 per quarter, and an annual structure payment of $600 per typical H-Frame structure, with some specific exceptions.  The Board found that MATL had not established a pattern of dealings with respect to the quantum of compensation, but held that a pattern of dealings exists with respect to the appropriate framework for structuring compensation.  While MATL produced a significant number of negotiated right of way agreements (typically required to show a pattern of dealings), the fact that half of the landowners on the line had not accepted MATL's offer, coupled with the fact that all of the produced agreements were with MATL itself, supported the Board's conclusion that a pattern of dealings did not exist. 

Despite some landowners' submissions that compensation should be structured as it is for oil and gas facilities (i.e. compensation for loss of use based on the entire acreage taken), the Board noted that per-tower consideration and transmission line to transmission line comparisons have been an accepted practice for 15-18 years.  Accordingly, the Board relied upon this history and framework as an established practice.  Part of this practice is the recognition that annual compensation is awarded on a per structure basis and does not account for conductors overhanging lands.

In considering compensation for general disturbance, the Board stated that it was acutely aware of the protracted nature of the construction and awarded two years of compensation in the amount of  $3,000 and an additional $1,500 for general disturbance in relation to the presence of assembled and unassembled structures on the right of way and the considerable uncertainty associated with the construction of the project. 

With respect to a claim for damages related to MATL's failure to specifically comply with conditions attached to the right of entry orders that enabled MATL to commence construction the Board determined that there was no evidence that the lack of compliance resulted in damages.  Instead, landowners were compensated for increased nuisance and anxiety in the Board's award of compensation under general disturbance.  The Board was clear that without establishing a loss related to or caused by specific actions, a damages award will not be awarded. 

The Board also dismissed a further damage claim related to alleged lost production arising from construction on the basis that the landowners had not sufficiently raised the alleged issue with MATL before proceeding to the hearing.  The appropriate process is for the parties to attempt to resolve the matter themselves before requesting that the matter be decided by the Board. The referenced damage claims were raised on the last day of the hearing and without appropriate disclosure of certain documents, contrary to principles of fundamental justice.  Accordingly, the parties were given an opportunity to consider the full evidentiary record before making submissions by writing. The Board dismissed both of the above damage claims, along with a third claim alleging damage resulting from alkali introduced through MATL's construction activities.

While much of this decision is fact specific, there are some key points for both operators, particularly transmission facility owners, and landowners affected by transmission facilities.  Significantly, the Board's consideration of its ability to order that documents be produced and the limits of its powers to do so may make it difficult for landowners in future cases to obtain access to records from an operator.  On the other hand, while the Board may be of the view that it does not have the jurisdiction to compel production of records from operators, the Board made it clear here that it may in future cases prevent an operator from relying on particular positions if the operator has failed to produce relevant records to landowners.   Also, the Board's clarification as to the distinction between its treatment of compensation for oil and gas facilities, as opposed to transmission lines, is important in how all parties proceed with compensation discussions, whether these occur within the Board's process, or privately.

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