Property rights: Holey land

An Alberta farmer's defence of property rights has landed him in deep trouble with a provincial government addicted to oil and gas revenues.

Just about every piece of Alberta has two inconvenient owners: a farmer who grows crops or raises livestock above ground and an energy company that wants to suck up the oil and gas below the landowner's feet. To secure the necessary real estate for well pads, roads and pipelines (50,000 applications are approved each year), the energy industry employs approximately 1,600 licensed landmen to make the deals that build a firm's bottom line. “Every company wants to do it faster, quicker and cheaper,” explains Rick Kaminski, a Calgary-based landman for 25 years.

But Ray Strom could change that. Since 2002 the 53- year-old farmer and former oilpatch worker has advised landowners, for a fee, which oil-and-gas lease deals are good, bad or just plain ugly. (The fee is billed to the landowner but ultimately covered by the energy companies that proposed the deal in the first place.) His efficient defence of property rights, however, has landed him in deep trouble with a provincial government addicted to oil and gas revenues. It has also plunged the adviser into an ongoing court case that could either level the playing field for rural Davids or simply make Alberta's energy Goliaths, well, more powerful. (Full disclosure: I am one of some 150,000 rural landowners in Alberta.)

At stake is the interpretation of an obscure piece of legislation: the Land Agents Licensing Act. Designed to protect landowners from unscrupulous land sharks working for industry, the 1968 act not only created a professional monopoly but eventually required that “people who negotiate for or acquire an interest in land”take a six-week course and apprentice for a year under other agents.

Like half a dozen other unlicensed advocates in Alberta, Strom argued the act never applied to him because he didn't buy or sell land. He simply advised landowners about true property values, environmental liabilities, soil issues and long-term implications of high density well sites.

But four years ago, as shallow gas drilling became the rage throughout central Alberta, oil and gas firms started to press for a new interpretation of the law. They thought it now should apply to people like Strom. Gerald Kress, the province's deputy registrar of land agents, even warned Strom, whose business card reads “Advocacy for Agriculture,” that he might be violating the act by practising without a license. “If I'm in violation, charge me,” replied Strom. “I don't believe I'm doing anything illegal.”

In 2003, a land agent for Exxon Mobil Corp. complained to Kress that Strom “engaged in the activities of a land agent” when he advised Bob and Shirley Chalut about a new well lease and then sent Exxon Mobil the bill for his services. Had the company paid Strom, it would “have been in violation of the act,” explained company spokesman Pius Rolheiser. After EnCana Corp. and Aquila Networks Canada, a utility firm now part of Fortis, lodged more complaints against Strom, the registrar formally charged him with breaching the Land Agents Licensing Act. The complaints, however, were not entirely accurate. According to Bob Chalut, a farmer in Bonnyville, Alta.,Strom never misrepresented himself as a land agent and had in fact been hired by the family's lawyer, Julian Bondar, to help out with negotiations. “We asked Exxon Mobil why they lied,” says Chalut, who got no answer. “It really bothered me….It frustrates me that the companies don't want to be fair.” Strom's trial took place in a jam-packed Vegreville courtroom in January. According to a court document, during the proceedings deputy registrar Kress reluctantly testified that the Land Agents Licensing Act created “an unbalanced playing field for those who are bound by its provisions.” In other words, if the province applied the letter of the law, landowners really didn't have the right to choose who they want to represent them in negotiations with oil and gas companies.

In his final judgment, Provincial Court of Alberta Judge Peter Ayotte agreed with Kress's assessment, calling the act “bad legislation in need of revision.” But he noted that these were “political not judicial issues.” Judge Ayotte found Strom guilty as charged and fined him $500. “I felt like I had been hit by a train,” says Strom. The decision also made it technically illegal for a son to offer his mother advice on an oil and gas land deal — if he charged a fee and wasn't certified as a land agent.

Leaders of three different groups representing nearly 2,000 landowners called the court's interpretation “unjust” and demanded the government fix the legislation by simply restricting it to its original mandate: the regulation of land agents. After several Conservative MLAs promised reform but failed to produce a written commitment to that effect, Strom launched an appeal that will be heard this July before the provincial Queen's Bench court. “I'm prepared to take this case to the Supreme Court,” he says. “No one has the right to tell a landowner who can defend themagainst a taking of their land.”

Meanwhile, the oilpatch has encouraged its well-heeled fraternity to lobby, too. The Canadian Association of Petroleum Landmen (CAPL) contends, for example, that if advocates like Strom aren't forced to be licensed land agents, then “unprofessional and unethical land advisors will unduly delay land negotiations” and cause unnecessary public hearings at great expense. (For the record, no landowner has ever filed a complaint against Strom.) Rick Kaminski, director of CAPL field acquistions, warned that the whole situation in rural Alberta could even become “chaotic” and affect the prosperity of the province. When asked on a popular radio show if a land agent could fairly represent both landowners and energy companies while being paid by energy companies, Kaminski replied: “Yes. You can if you do your job right.” The Canadian Association of Petroleum Producers would also like to see land agents ultimately act like real estate lawyers that represent both sides, adds CAPP spokesman David Pryce.

Kevin Feth, Strom's lawyer, says the legal wrangle has attracted the attention of local politicians as well as beef producers and the business press. “We've always had a one-sided industry where landowners had very little representation,” says Feth. “And now those who had access to someone like Strom have lost the right to representation.” Without that right, argues Feth, “David has been asked to put down his sling and go and fight Goliath.”