TABER, Alta. – A group with the support of thousands of farmers will appear before the Supreme Court of Canada to oppose a legal ruling that allows energy companies to walk away from unprofitable wells on agricultural land.
The court announced Thursday that it will hear from the Action Surface Rights Association in an appeal of the so-called Redwater decision. It allows bankrupt energy companies to abandon wells during bankruptcy proceedings without having to clean up the sites.
“It didn’t seem like anybody cared about the landowners’ position,” said Daryl Bennett, a farmer from Taber, Alta., and a member of the surface rights group, which asked the court to let it intervene.
“Industry is able to walk away from the requirement to return the land back like it was when they first took it.”
The 2016 ruling in Alberta Court of Queen’s Bench allows bankrupt energy companies to sever their connection with unprofitable and unreclaimed wells when their assets are sold off for creditors. Since that decision, more than 1,800 wells representing more than $100 million in liabilities have been abandoned.
Alberta’s energy regulator, the Canadian Association of Petroleum Producers, the Alberta government and legal scholars have all warned about the consequences of that ruling.
Bennett and his neighbours are living with the results. He said friends of his have four wells on their land, two of which have been cut loose.
“The company has come in and they’ve said they don’t have to follow any of the terms of the lease any more,” he said. “They (farmers) can’t get a loan on their land because of existing pollution. There’s noxious weeds being spread from lease to lease by the operator. They can do whatever they want.
“The land’s not being respected. The landowners aren’t being respected.”
Farmers also lose out on promised lease payments. The Orphan Well Association, an industry-funded group that cleans up wells that have been left unreclaimed, can’t keep up with the number of companies walking away.
Bennett points out that farmers in Alberta can’t legally refuse an energy company that wants to drill on their land.
“The head of the Alberta Energy Regulator has just come out and said the system is broken. If the system is broken, why are you still imposing it on landowners?”
Jim Ellis has said the problem lies in federal legislation and a three-year economic downturn that has left many good-faith operators in dire straits. The original judge ruled that federal bankruptcy law takes precedence over provincial environmental rules.
Bennett said his group has about 200 members. Its appearance before the court is supported, however, by farm groups across Alberta and Saskatchewan, as well as by the Canadian Federation of Agriculture and the National Farmers Union.
The Alberta regulator has said it will examine the histories of companies and their directors applying for licences to drill a well. Staff will look for evidence of poor regulatory compliance or non-payment of bills such as taxes, royalties and other industry levies.
Lawyers for the landowners are to address the Supreme Court on Feb. 15.
— By Bob Weber in Edmonton. Follow @row1960 on Twitter