ATCO to pay for lost canola revenues

A four-year-old order that recently came to light, compensating farmers for potential canola losses, sets a precedent and could have far-reaching effects.

A farm couple’s efforts at documentation paid off as ATCO Energy was ordered to pay Roger and Debora Welsh for the potential disease pollution and loss of revenue and costs of mitigation of clubroot infection on their farm near Vegreville, Alta.

The 2014 decision, that surfaced last week during public accounts hearings, potentially paves the road to producer compensation when companies put farms at risk.

The Alberta utility company has been ordered to pay the farmers for future canola revenue losses, after a surface rights court found ATCO Energy failed to meet standards to protect the farm from clubroot.

The decision has ramifications for other producers in similar circumstances who sign new surface rights agreements with businesses.

“This decision does set a precedent,” said Alberta farmers’ advocate Peter Dobbie.

According to court documents, the Welshes were forced to turn some cropland into pasture because ATCO failed to meet clubroot prevention measures it was told to follow. The company was granted access to the Welshes land near Vegreville, Alta., to construct a power line in 2013.

By taking extensive notes, hundreds of photos, hours of video, as well as relying on expert opinion from plant pathologist Ieuan Evans, the Welshes illustrated that ATCO entered their land with dirty vehicles, failed to control weeds, and likely introduced volunteer canola.

“The Welshes went to extraordinary efforts in gathering evidence. The data they had was key,” said Michael B. Niven, a lawyer with Calgary-based Carscallen LLP, who took the case. Lawyer Christy Lee was also on the case.

Based on those facts, the surface rights board determined the Welshes’ farm could have potentially been infected with clubroot. As well, it said ATCO should pay them for essentially losing out on future canola revenue from about 18 cropland acres, because their mitigation plan was to turn that land into pasture to reduce the risk of spreading clubroot.

“The panel does not view the issue as one of compensation for clubroot contamination per se, but rather as a matter of compensation for the cost of mitigation,” the court decision said.

The affected acres included two right of entries on which ATCO operated, as well as two buffer zones around those areas.

In total, ATCO was ordered to pay the Welshes $5,466 annually to cover the loss of canola revenue for those acres.

The ruling said canola was a major source of revenue for Welshes, and that clubroot would have a significant financial impact on them.

The canola compensation could continue indefinitely, though ATCO could argue later this year that it should no longer be required to pay. Alberta law states that compensation can be renegotiated every five years if changes occur, though this doesn’t apply to freehold mineral rights holders.

If ATCO wants to renegotiate, Niven said he will go back to court to fight them on that.

As well, the Welshes were awarded about $165,000 to cover legal, personal and consulting costs.

“This whole process was a huge emotional drain on the Welshes,” Niven said, “and it’s not often you get clients as committed and as organized as they are.”

The case may be helpful to landowners who find themselves dealing with companies wanting to access their land, said Dobbie.

While getting legal advice is recommended if seeking a similar claim, he said farmers can use this court decision to their advantage, as long as they can prove that they’ve had clubroot mitigation strategies in place and that the company was made aware of them. That way, they can argue the company should pay for lost crop revenue because, as part of their mitigation strategy, they would have to turn some productive cropland into pasture.

“If a landowner is seriously concerned and is prepared to put the time and energy into negotiating for compensation for a disease mitigation strategy, I think this case is important,” Dobbie said.

“They can point to the case and say, it’s reasonable for me to do that (turn affected cropland into pasture) and for you to pay me the compensation.”

While it appears difficult to get compensation for lost revenue after a lease agreement has been signed, it’s something farmers could try to appeal during compensation renegotiations, Dobbie said.

“The onus is on the landowner to prove to the surface rights board that there is an increase in adverse effect. The more evidence, the better.”

He added companies have generally improved how they access land since the Welsh decision. This includes less ground disturbance and using rig mats along the right of way.

“Steps are being taken,” he said. “There’s no doubt in my mind that there will be operators that are clear and organized, while others don’t do it all the time.”

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