Cap on Damages Claims Increased to $50,000
Written By Daron Naffin, Tim Myers and Sam Denstedt
On June 11, 2020, the Honourable Grant Hunter, the Associate Minister of Red Tape Reduction, introduced Bill 22: Red Tape Reduction Implementation Act, 2020. Mr. Hunter noted Bill 22 "recommends 14 legislative changes across six ministries," including amendments to the Surface Rights Act. The following provides a brief overview of the changes to the Surface Rights Act as well considerations for operators arising from same.
Section 17 of Bill 22 proposes amendments to sections 27, 29, 30, and 36 of the Act, as well as the addition of a new section 35.1. The most notable proposed change is an increase to the maximum amount of damages that can be claimed by landowners or occupants in applications to the Surface Rights Board under section 30 of the Act, from $25,000 to $50,000.
Bill 22 passed first reading in the Legislature on June 11, 2020, but requires a number of further legislative steps before coming into force as law.
Proposed Increase to Cap on Damages Claims under Section 30
The most significant change to the Act is the proposed amendment to section 30, which provides landowners and occupants with the ability to seek recovery for damages caused by energy activities on their lands (including loss or damage to livestock and personal property). Currently, the Board's jurisdiction to hear damages applications is restricted to claims that do not exceed $25,000. The proposed amendment would double this cap to $50,000. If passed into law, the amendment will likely result in claims that would have previously been brought before the Courts being heard by the Board, which is intended to provide a less formal and more expeditious process for the resolution of surface rights and associated compensation disputes.
Overview of Other Proposed Changes
The proposed change to section 27, which establishes the framework for the review of annual compensation payable under surface leases every five years, relates to subsection 27(8) and clarifies that an application for a review of the rate of annual compensation must be made after the fifth anniversary of the relevant surface lease. This change simply codifies the Board's current guidance on the timing of rent review applications.
Sections 29 and 35.1
The proposed change to section 29 relates to the proposed addition of section 35.1, which would enable operators to assign Board orders. Section 29 of the Act empowers the Board to rehear applications as well as review, rescind, amend or replace Board decisions and orders. The proposed amendment to section 29 adds an express reference to the newly proposed section 35.1. The proposed section 35.1 empowers an operator to assign a Board order to a new entity without requiring the issuance of a further Board order, provided that a copy of the assignment be filed with the Board, all impacted parties are notified of the assignment, and if there are any accompanying Alberta Utilities Commission or Alberta Energy Regulator licences, permits, or approvals, a copy of the approval of transfer of such authorizations be provided to the Board as well.
Finally, the proposed changes to section 36 are aimed at streamlining the process for landowners to recover unpaid surface lease rental payments. Currently, subsection 36(5) empowers the Board to suspend and/or terminate an operator's right to enter a site if rental payments are outstanding and the operator fails to comply with a Board notice demanding such payment. Section 36(6) then empowers the Board to direct payment from the Province's general revenue fund to the landowner for the unpaid rentals if the operator's right to enter has been terminated under section 36(5). Section 36(7) allows the Board to direct that subsequent unpaid rentals be paid to the landowner without requiring that a further demand notice be sent to the operator, as well as a further notice of suspension and/or termination of the operator's right to enter the site.
Bill 22 proposes amendments to subsections 36(6), (7), and (8) that would authorize the Board to direct payment from the general revenue fund to the landowner without having first ordered suspension or termination of the operator's right to access the site.
If you have any questions about the proposed amendments to the Act in Bill 22 and how they may affect your business, please contact the authors or any member of the firm's Regulatory team.