Alberta grazing leases keep $45M per year out of public hands, review finds

[dmcbride]

I don't think the NDP is going to back down from this.

http://www.cbc.ca/news/canada/calgar...gary-1.3409117

An independent review suggests the Alberta government would have as much as $45 million in extra annual revenue if it revamped how it handles grazing leases.

The long-standing program allows cattle producers to rent vast swaths of Crown land and was criticized last summer by the province's auditor general.

Merwan Saher said the government manages 5,700 grazing leases on more than two million hectares of public land on behalf of Albertans, which contributes about $4 million each year to government coffers.

Saher said it appears ranchers leasing from the government are deriving personal financial benefits when they turn around and accept compensation from oil and gas companies to gain access to wells on that land. He said the province is forgoing more than $25 million each year as a result.

The independent review by the University of Alberta's Land Institute looked at alternative models for grazing leases, including one in place in neighbouring Saskatchewan. Each would result in increased compensation to the province ranging from $36 million to $45 million a year, the review suggested.

"We went into it somewhat naively looking at how those revenues would change ... but as we dug into the system, we realized it's a lot more complicated than just flicking a switch," said research director Vic Adamowicz.

"I think we went into it thinking it was a little more black and white than it was."

The government is doing its own review of the leasing program and Environment Minister Shannon Phillips has met with the land institute.

"The information they presented, and that provided by other stakeholders including agriculture and oil and gas producers, helps to inform and support future policy decisions," Phillips said.

Adamowicz said the government must consider rental payments leaseholders make as well as compensation they receive from energy companies. Oversight from Alberta's Surface Rights Board is also needed, he said.

System is 'super flawed'

Cliff Wallis from the Alberta Wilderness Association said leaseholders have been doing a good job caring for the land, but some are making a lot of money that could go elsewhere.

"It's super flawed. It basically creates haves and have-nots between the have ranchers who have oil and gas wells and those who don't," Wallis said.

"The money that comes from surface rights payments should be going back into a grassland conservation fund or a public land conservation fund to deal with wildlife issues, compensating ranchers for various things, help with conservation."

Wallis said his group would "scream like stuck pigs" if the government tried to divert any new lease money into general revenues.

The Alberta Grazing Leaseholders Association admits the program isn't perfect, but believes the auditor general should have done more homework.

"There are a lot of people who don't understand it and don't want to listen to why it works the way it does, but it's been a very good instrument over the years to ensure these lands were settled and cared for," said Larry Sears, who leases about 2,300 hectares in southwestern Alberta.

"The vast majority of the leaseholders in the province have five or less installations and less than half of the leaseholders get any oil and gas activity at all."

[Okotokian]

Originally Posted by dmcbride

"There are a lot of people who don't understand it and don't want to listen to why it works the way it does, but it's been a very good instrument over the years to ensure these lands were settled and cared for," said Larry Sears, who leases about 2,300 hectares in southwestern Alberta.

Yes, because god forbid there was land that wasn't "settled" and that any citizen could go on. The land in K Country isn't "settled", and seems OK to me. (McBride, I know you are just quoting, not advocating)

Originally Posted by dmcbride

"The vast majority of the leaseholders in the province have five or less installations and less than half of the leaseholders get any oil and gas activity at all."

So the majority of lease holders should have no problem with taxpayers getting the resource revenue instead of leaseholders. I have no problem with grazing leases. Just make them for grazing. If there is a resource disruption on 10% of the lease, reduce the lease payments by 10%.

I own rental property. If there is ever compensation for city-caused disruption or expropriation, I guess my renters will get the money, not me.

[OpenRange]

The money isn't resource revenue. I wish everyone would stop referring to it in that way. It is compensation for loss of use and the adverse effects and disruption to the leaseholder caused by oil and gas activity. They build a road into the well, mow the road allowance which is now useless for grazing and mow the entire leases in most cases. I still have to pay for those acres in my lease agreement with the province. As well I had to pay for those acres when I purchased the lease from the previous owner. The province thinking they will receive those damages is idiotic. The oil/gas companies must be licking their chops waiting for this, the first thing they will do is stop paying because the province isn't incurring any damages, the leaseholder is. They will challenge that in court and win, no doubt. The province cannot prove loss of use to itself because they aren't actually using the property, it's just sitting there. If you think the companies won't do that I can think of 45 million reasons they would. Also the province takes about 20% of the damages in taxation and also receive their own substantial revenue from wells. Point being the government would have to open the Surface Rights Act to amend the legislation and that would open up the whole act to possible industry challenges, and with depressed energy revenues for companies, expect a fight.

[^v^Tinda wolf^v^]

Agreed, this is an idiotic move. On the other hand a person could fill the freezer with t bones a lot easier !

[rugatika]

Originally Posted by OpenRange

The money isn't resource revenue. I wish everyone would stop referring to it in that way. It is compensation for loss of use and the adverse effects and disruption to the leaseholder caused by oil and gas activity. They build a road into the well, mow the road allowance which is now useless for grazing and mow the entire leases in most cases. I still have to pay for those acres in my lease agreement with the province. As well I had to pay for those acres when I purchased the lease from the previous owner. The province thinking they will receive those damages is idiotic. The oil/gas companies must be licking their chops waiting for this, the first thing they will do is stop paying because the province isn't incurring any damages, the leaseholder is. They will challenge that in court and win, no doubt. The province cannot prove loss of use to itself because they aren't actually using the property, it's just sitting there. If you think the companies won't do that I can think of 45 million reasons they would. Also the province takes about 20% of the damages in taxation and also receive their own substantial revenue from wells. Point being the government would have to open the Surface Rights Act to amend the legislation and that would open up the whole act to possible industry challenges, and with depressed energy revenues for companies, expect a fight.

How much does a farmer get for access rights on leased land per well? I've never really heard how the amount is derived.

[Kanonfodder]

Originally Posted by rugatika

How much does a farmer get for access rights on leased land per well? I've never really heard how the amount is derived.

Deeded land gets a much higher compensation level

[Okotokian]

Originally Posted by Kanonfodder

Deeded land gets a much higher compensation level

So that would also be public subsidization of the industry? Use public lands and the crown will take/get less than a private landowner would?

[Unregistered user]

So they're finally listening to Bob Scammell.

[elkhunter11]

I guess they are looking for money to pay for those new civil service jobs , that they just created.

[Domestique]

And the noose tightens around cowboy welfare, 'bout time.

[schmedlap]

Originally Posted by OpenRange

The money isn't resource revenue. I wish everyone would stop referring to it in that way. It is compensation for loss of use and the adverse effects and disruption to the leaseholder caused by oil and gas activity. They build a road into the well, mow the road allowance which is now useless for grazing and mow the entire leases in most cases. I still have to pay for those acres in my lease agreement with the province. As well I had to pay for those acres when I purchased the lease from the previous owner. The province thinking they will receive those damages is idiotic. The oil/gas companies must be licking their chops waiting for this, the first thing they will do is stop paying because the province isn't incurring any damages, the leaseholder is. They will challenge that in court and win, no doubt. The province cannot prove loss of use to itself because they aren't actually using the property, it's just sitting there. If you think the companies won't do that I can think of 45 million reasons they would. Also the province takes about 20% of the damages in taxation and also receive their own substantial revenue from wells. Point being the government would have to open the Surface Rights Act to amend the legislation and that would open up the whole act to possible industry challenges, and with depressed energy revenues for companies, expect a fight.

You are correct in what the compensation is for. But, I don't think the "right of entry" and disturbance compensation amounts are what is being talked about, so much. What is being talked about is who should receive the annual surface lease rental compensation. I would agree that it is the occupant, not the owner, who should get most of the inital compensation for entry, construction, disturbance, and the like. The 20% you speak of is not, I believe, "taxation", but rather the levy for the share of this compensation that they take as owner. Both owner and occupant are entitled to compensation under the Surface Rights Act, and if they do not agree, with the operator, as to amount and shares, the Surface Rights Board determines this.

The damages are in effect "deemed" by the Act. One does not have to prove "actual" to receive them. The extent is an issue of the type of disturbance, etc. So arguing that the operators will not have to pay the Province just the same is specious. It is the Act which governs this, not general common law. This is one of those diversionary arguments that is thrown out and eaten up because people do not know that it is just wrong.
The Act does not distinguish between owner and occupant in terms of the total compensation payable. It does not matter who is entitled - the total amounts do not change.

The government does not have to "open" the Act to bring in minor amendments to change compensation in grazing lease matters. It just needs to make quite minor amendments to a few sections, or add a section or two. This is done to many statutes on a regular basis. It does not put the whole statute up for debate (any more than it is on a daily basis, like any laws) - just the changes - and a majority government has the final say anyway. This has no effects on industry at all. Again, a purely diversionary argument with no merit at all.

The real issue is who should get the surface lease Revenue (not the initial compensation, which is distinct). Under the Public Lands Act, the rentals for grazing leases are based purely on a "forage value" formula for the particular lands. This has not been up-dated in the regs for a very long time, and needs to be. In any event, the intrusion of a surface lease has a measurable impact on that, and thus, the rent should be reduced accordingly. But that does not indicate, to me at least, why the rental should go to the lessee and not the owner. I see that aspect of it as a "windfall" subsidy from the public purse. To compare it to the situation of lessees of private land for the same purposes, the standard is that the owner gets the revenue, and the lessee gets an appropriate per acre rental reduction due to the loss of useable area.

I do think they would have to "grandfather" any changes, to make this fair to those who purchased leases on the market in partial reliance on existing projected surface lease revenues with respect to the price paid. The government should make the changes applicable only to new surface leases arising after the changes are enacted, and maybe renewals of existing surface leases made more than x years after the enactment.

[sjd]

No-one objects to ranchers being compensated for impacts. It's when those payments are 10 times greater than the fee the rancher pays to access crown land that is stinks like a scam.

It's an obvious place where taxpayer is not being protected and there is financial problem that should be exposed.

Where is the fiscally conservative opposition standing up for the taxpayer and highlighting the very small number of individuals abusing the system? Silence.

[sirmike68]

[QUOTE=sjd;3113662]No-one objects to ranchers being compensated for impacts. It's when those payments are 10 times greater than the fee the rancher pays to access crown land that is stinks like a scam.

X2

[shep dog]

This is far overdue.

Bob Scammell had it right 20-odd years ago.

Ol' Doc Seaman is probably rolling over in his grave.

[mich]

Originally Posted by Okotokian

Yes, because god forbid there was land that wasn't "settled" and that any citizen could go on. The land in K Country isn't "settled", and seems OK to me. (McBride, I know you are just quoting, not advocating)

Some of it was until it was legislated out of private hands


So the majority of lease holders should have no problem with taxpayers getting the resource revenue instead of leaseholders. I have no problem with grazing leases. Just make them for grazing. If there is a resource disruption on 10% of the lease, reduce the lease payments by 10%.

Welcome to how it is factored in already

I own rental property. If there is ever compensation for city-caused disruption or expropriation, I guess my renters will get the money, not me.

If your renter lost use of what he is paying for ...yes

Originally Posted by Okotokian

So that would also be public subsidization of the industry? Use public lands and the crown will take/get less than a private landowner would?

no, you have half of the story

Originally Posted by elkhunter11

I guess they are looking for money to pay for those new civil service jobs , that they just created.

The net effect will be the same or less money and they will create many more union leeches

Originally Posted by Domestique

And the noose tightens around cowboy welfare, 'bout time.

so wrong in so many ways

[mich]

[QUOTE=sirmike68;3113691]

Originally Posted by sjd

No-one objects to ranchers being compensated for impacts. It's when those payments are 10 times greater than the fee the rancher pays to access crown land that is stinks like a scam.

X2

These properties are kinda like the lost city of Atlantis..... you hear about them but no one has ever seen them

[purgatory.sv]

Originally Posted by schmedlap

You are correct in what the compensation is for. But, I don't think the "right of entry" and disturbance compensation amounts are what is being talked about, so much. What is being talked about is who should receive the annual surface lease rental compensation. I would agree that it is the occupant, not the owner, who should get most of the inital compensation for entry, construction, disturbance, and the like. The 20% you speak of is not, I believe, "taxation", but rather the levy for the share of this compensation that they take as owner. Both owner and occupant are entitled to compensation under the Surface Rights Act, and if they do not agree, with the operator, as to amount and shares, the Surface Rights Board determines this.

The damages are in effect "deemed" by the Act. One does not have to prove "actual" to receive them. The extent is an issue of the type of disturbance, etc. So arguing that the operators will not have to pay the Province just the same is specious. It is the Act which governs this, not general common law. This is one of those diversionary arguments that is thrown out and eaten up because people do not know that it is just wrong.
The Act does not distinguish between owner and occupant in terms of the total compensation payable. It does not matter who is entitled - the total amounts do not change.

The government does not have to "open" the Act to bring in minor amendments to change compensation in grazing lease matters. It just needs to make quite minor amendments to a few sections, or add a section or two. This is done to many statutes on a regular basis. It does not put the whole statute up for debate (any more than it is on a daily basis, like any laws) - just the changes - and a majority government has the final say anyway. This has no effects on industry at all. Again, a purely diversionary argument with no merit at all.

The real issue is who should get the surface lease Revenue (not the initial compensation, which is distinct). Under the Public Lands Act, the rentals for grazing leases are based purely on a "forage value" formula for the particular lands. This has not been up-dated in the regs for a very long time, and needs to be. In any event, the intrusion of a surface lease has a measurable impact on that, and thus, the rent should be reduced accordingly. But that does not indicate, to me at least, why the rental should go to the lessee and not the owner. I see that aspect of it as a "windfall" subsidy from the public purse. To compare it to the situation of lessees of private land for the same purposes, the standard is that the owner gets the revenue, and the lessee gets an appropriate per acre rental reduction due to the loss of useable area.

I do think they would have to "grandfather" any changes, to make this fair to those who purchased leases on the market in partial reliance on existing projected surface lease revenues with respect to the price paid. The government should make the changes applicable only to new surface leases arising after the changes are enacted, and maybe renewals of existing surface leases made more than x years after the enactment.

Like your post they usually contain information that can be relevant to procedures.

[avb3]

A little known fact is that many farmers and ranchers over and above the surface disturbance payments, charge a so-called consulting fee to the oil companies for negotiating the payments on grazing leases. It is not unheard of to see this being charged out at 3 to $400 a day.

You will never see any of those figures on any contracts.

[lannie]

Originally Posted by avb3

A little known fact is that many farmers and ranchers over and above the surface disturbance payments, charge a so-called consulting fee to the oil companies for negotiating the payments on grazing leases. It is not unheard of to see this being charged out at 3 to $400 a day.

You will never see any of those figures on any contracts.

If that is a fact then you have proof to show us right?

[hal53]

Originally Posted by avb3

A little known fact is that many farmers and ranchers over and above the surface disturbance payments, charge a so-called consulting fee to the oil companies for negotiating the payments on grazing leases. It is not unheard of to see this being charged out at 3 to $400 a day.

You will never see any of those figures on any contracts.

Another little known fact is the oil companies pay someone to negotiate the contracts too

[MountainTi]

Originally Posted by avb3

A little known fact is that many farmers and ranchers over and above the surface disturbance payments, charge a so-called consulting fee to the oil companies for negotiating the payments on grazing leases. It is not unheard of to see this being charged out at 3 to $400 a day.

You will never see any of those figures on any contracts.

That's about 1/3rd of what I would charge. It is oilfield, why wouldn't I charge my oilfield daily rate?

[deerguy]

I for one look foreword to this. The farmers need compensation for a new fense then no problem. All you have to do is ask.

[MountainTi]

Originally Posted by Kanonfodder

Deeded land gets a much higher compensation level

About 3X higher from any numbers I have heard

[hillbillyreefer]

Originally Posted by MountainTi

That's about 1/3rd of what I would charge. It is oilfield, why wouldn't I charge my oilfield daily rate?

Some people like avb3 believe agricultural producers shouldn't make a profit, investing millions in an operation should just be for fun.

[hillbillyreefer]

Originally Posted by MountainTi

About 3X higher from any numbers I have heard

More in a lot of cases.

[Matt L.]

Originally Posted by hillbillyreefer

More in a lot of cases.

Wonder if that's changing or is going to change.

[MountainTi]

Originally Posted by hillbillyreefer

Some people like avb3 believe agricultural producers shouldn't make a profit, investing millions in an operation should just be for fun.

Precisely. When I am working in the oil industry, I get paid a day rate my first minute of work. Why should negotiations with an oil company be any different? Work to be done elsewhere in a multi million dollar business (farm). Cut into that day, it needs to be paid for

[hillbillyreefer]

Originally Posted by Matt L.

Wonder if that's changing or is going to change.

The way things are going no one will be getting any new leases.

Now the dippers are creating more uncertainty in agriculture, first bill 6, now this, let's get on with it and get it over with. It's difficult to plan with these morons running the show.

[Ranch11]

Originally Posted by avb3

A little known fact is that many farmers and ranchers over and above the surface disturbance payments, charge a so-called consulting fee to the oil companies for negotiating the payments on grazing leases. It is not unheard of to see this being charged out at 3 to $400 a day.

You will never see any of those figures on any contracts.

Never heard of this before. I've heard of negotiating payment, but only one deeded land.

[Ranch11]

I know our payments for our lease land compared to our deeded land is waaaaaaaay less. One grazing lease has two oil leases on it, one active and abandoned. 2500$ a yr. and it'll be less this year I'm sure. The other lease has zero oil leases on it. That 2500$ doesn't even cover wages to maintain fences on it.