Alberta auditor-general says releasing information on surface lease payments from energy companies is in the public interest
EDMONTON — Grazing leaseholders emphasized their good land stewardship and ecological benefits for Alberta while downplaying compensation payments from energy companies during a recent public accounts committee.
However, auditor-general Merwan Saher said environmental, social and economic aspects of grazing leases, including compensation, need to be considered in the grazing lease review.
“We are not applying any special approach to this program. It is simply applying good management practice to this lease program,” Saher said after the meeting.
Saher said in his 2015 report that the province could be out $25 million in annual revenue from oil and gas companies that are now being paid to leaseholders.
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“The current legislation allows an unquantified amount of personal financial benefit to some leaseholders over and above the benefits of grazing livestock on public land,” he said at the time.
Deputy environment minister Bill Werry told the committee that the review isn’t looking to require leaseholders to disclose the compensation paid to leaseholders from energy companies.
“That’s outside the scope of our current review,” he said.
However, Saher said the report will be incomplete without financial information on how much money is paid to leaseholders. Saher said it was difficult to find information on surface lease compensation. In 2013, one of the largest of the 54 grazing associations paid the province $68,875 in rent for its multiple leases and collected $348,068 in payments from industry operators for activity on its leased land.
“I think it is in the public interest to understand. Otherwise, the constant bickering, innuendo, will continue into the future. The information is there. It should be extracted and made public and let Albertans see the amount of compensation that is going leaseholders.”
Bill Newton, a member of the Alberta Surface Leaseholders Association, said the grazing lease review is broader than just compensation levels.
“I think the compensation system is working really well the way it is,” said Newton.
“I don’t think the compensation for disturbance and adverse affect and inconvenience and nuisance is really part of the discussion for the department.”
Larry Sears of the leaseholders association said compensation is not revenue for leaseholders.
“The compensation is not rent, nor is it revenue, nor is it an access payment,” he said.
“The intent of the compensation is intended to make leaseholders whole. That is, to put the grazing lease holder affected by energy operations in a financial position, as close as possible, to the position they were in prior to the entry by the operator.
“Some have suggested this compensation go to the province. It would be difficult for the province to argue they are directly affected by noise, dust, gates left open, moving cattle, loss of use or nuisance because the province does not experience these impacts.”
Instead, the association said the government should look at other revenue sources, including royalty rate increases, annual mineral lease rental payments, mineral lease bonus payments and other taxes on the energy industry.
Larry Gautier of the Northern Alberta Grazing Association said a lot of money has been spent clearing land to make a usable grazing lease. Unlike southern Alberta, most of the grazing leases in northern Alberta were originally bush.
“There is a lot of misconception with urbanites,” he said. “They see us as taking advantage of a good situation, but they don’t understand that it took us a lifetime and tons of money to build the leases.”
Gautier said the association does agree that there needs to be a review of the grazing lease rental rates, which have been frozen since 1994.
James Hargrave of the Alberta Grazing Leaseholders Association said compensation helps stewardship, which benefits all Albertans.
“We need a functional ecosystem, a functional grassland, and that is what generates environmental benefits to society,” he said.
“If we don’t have these incentive tools like compensation to manage for that adverse effect, then in the end the stewardship is going to suffer.”
Werry said most leases are well managed, but the department needs to do a better job reporting the environmental and social benefits from the leases.
“I believe we as a department can do better in reporting to Albertans the value they are receiving for the way in which we are managing public lands,” he said.
“We do believe individuals in-volved in this activity are stewards and they are responsible stewards of the land.”
