Aug 3 2009

O Canada!

Spectra Energy & Industry Is Just As Bad In Canada

A first-rate piece of journalism from the Canadian Vancouver Sun provides keen insight into how unfairly property owners are treated when it comes to government and energy companies seizing property rights.

Here is the link to this report by Pete McMartin:

In the event the link does not last, here is a pdf file: property-rights-in-canada

McMartin’s article is ostensibly about a pipeline bomber in the Peace River Region around Vancouver, in the province of British Columbia (BC), Canada.  The core of the story, however, is a lucid explanation of how government and energy companies punish property owners.  These are the very folks they should try to win over, because they own the key asset (the land) coveted by energy companies and government.

The threat and fact of eminent domain (or “expropriation”) in Canada is as bad as it is in the US.  EnCana Corporation and Spectra Energy are the industry “stars” in the article.

As Reporter McMartin notes:
Locals had little say in the pace of that change [driven by the energy industry]. Under provincial law, subsurface mineral rights superseded the surface property rights of landowners, and if an oil or gas company wanted access to a farm or acreage, there was little a landowner could do about it. Leases and rents could be negotiated, and sometimes the location of wells, but that was about it.

Canadian landowners have the option of appealing to the provincial government’s Mediation and Arbitration Board, which is an arm of the Ministry of Energy, Mines and Petroleum Resources.

But as the article notes:
Many landowners, however, quickly came to mistrust the board. Many felt its only purpose was to grease the way for the oil and gas companies.

Sounds like the Federal Energy Regulatory Commission (FERC) here in the US.

As landowners told Reporter McMartin:
“There’s no doubt about it,” Ken Vause said. “They’re a kangaroo court. All they’re there for is to facilitate the oil and gas industry getting on our lands.”

We’re having flashbacks as we read this.  In the case of our own Spectra Energy seizure of property rights in Bedford County, PA (under the Steckman Ridge Project), the FERC project manager, Maggie Suter, declared:  “This is a done deal.”

She said this to our attorney at the time, Tony DePastina, while the project was still in a proposal stage – or so we thought.

Back to our Canadian friends:  Even the chairwoman for the Canadian Mediation and Arbitration Board, Cheryl Vickers, admitted:  “It was a mess,” when she took over the chair in 2007.  “(The mediation and Arbitration Board) had no credibility,” according to the Vancouver Sun article.

The article went on to report the experience of Ken Vause and his family when Spectra Energy arrived on the scene in Vancouver.  As the article notes, “landowners weren’t necessarily anti-oil-and-gas.”

In fact, Ken Vause and his family “had not only accommodated the industry, they had been a part of it.  Ken worked on drilling rigs himself.  It helped pay for his farm, he said,” according to the article.

When Spectra Energy arrived, however, the Vauses “found themselves in the fight of their lives.”  Reporter McMartin shares this account:
Another company, Spectra Energy Midstream Corp., wanted access to their land to lay a pipeline. At first, the Vauses thought they could live with it, but then they found out it would run straight through one of their working fields. They ended up going to mediation, then arbitration.

The Vauses hired a lawyer: Spectra brought a battery of lawyers and industry professionals to the table. Both stages went against the Vauses, and Spectra was granted access to their spread. The couple then asked the B.C. Supreme Court for a judicial review of the decision, but were refused because of time limitations.

The Vauses were ordered to pay 90 per cent of Spectra’s legal costs for the judicial review application.

The money the Vauses ended up getting from Spectra for access to their land – about $19,000 – didn’t cover half their legal fees and expenses.

Spectra spokesman Rosemary Filba said the Vauses had “a somewhat unrealistic idea what fair compensation would be” and that Spectra has good relationships with the thousands of other landowners it deals with in the region. “It’s an unfortunate situation,” she said.

Ah, yes, once again an “unfortunate situation” for property owners – but not energy companies.  Our experience is that property owners who settle with Spectra Energy do not do so because they are happy.  They do so because they have a legal gun pressed against their temple.  So the notion that “thousands of other landowners” are happy is a casual lie the energy industry loves to invoke.

One wonders whether Spectra spokesperson Rosemary Filba can provide copies of any lease agreements Spectra Energy may have with government entities in Canada.  Those documents would provide a very realistic idea of “what fair compensation would be.”

Spectra Energy and the energy industry have a long and secret history of sweetheart lease deals with government while property owners are treated shabbily.

The treatment of Canadian property owners is particularly inhospitable when one realizes that current Spectra Energy CEO Greg Ebel is a native of Canada.  He began his career in Toronto, and received his BA degree at York University, Canada’s 3rd largest university, and spent 4 years working for the Canadian government.

Hmmmm.  Is the government-industry picture coming into focus?

Spectra Energy has a large presence in Canada with multiple projects in Ontario, British Columbia and elsewhere.

In Spectra Speech, “just compensation” means “compensation just for us.”  After all, if Spectra Energy paid landowners fairly for seizing their property rights, that could impact million-dollar paydays for its CEO and other members of the executive team.

It might reduce the amount of money Spectra Energy has to buy good PR to compensate for its shabby treatment of property owners.

For example, early this year, Spectra Energy announced it would financially support eight Canadian and US amateur athletes “competing for their national teams in winter sports.”

While Spectra Energy did not disclose the amount of money it would spend, the Calgary Herald reported that that company would spend $214,000 over three years.  For details, see our blog on “Just Compensation” at this link:

We salute Reporter Pete McMartin and his journalistic colleagues across North America who are beginning to tell the story of how an entrenched industry and government abuse the rights of property owners.

If one thinks about it — between the government and the gas companies — landowners are confronted by the equivalent of an energy cartel that effectively controls prices and competition, thus short changing property owners who possess the key asset (the land).

Oh, Canada.

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