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There is a clear need for an organization which can provide freehold owners with access to the information and education to help them properly deal with their valuable resources. There is also a clear need for an organization that can represent the collective interests of freeholders in regulatory and judicial proceedings in a professional manner, and that can lobby for greater fairness for freehold owners.

Since inception, FHOA has struggled with the issue of how to fill these needs. The association has: built this web site; published detailed newsletters dealing with issues which impact freehold owners; conducted information seminars throughout Alberta; provided hundreds of technical service requests to members; and answered thousands of phone calls and e-mails. FHOA has also participated in various government-industry task forces, discussed the plight of freehold owners with innumerable regulatory, government and industry representatives, and intervened on behalf of freehold owners in complex technical and legal issues both before regulatory authorities and the highest courts in Alberta and Canada. Largely as a result of FHOA’s efforts the coal bed methane ownership dispute was resolved in favour of individual freehold owners of natural gas in 2010 (see “The CBM Ownership Dispute”). In 2011, FHOA again played a significant role before Alberta’s highest court which recognized that a freehold lease is a contract “through which the lessor and lessee agreed to develop the leased substances for mutual benefit” (see “The of Capable of Producing Issue”). Freehold owners now have an organization which is recognized as a legitimate voice in matters impacting oil and gas exploration and development.

As of April, 2012 more than 4,700 individuals and family corporations representing more than 26,000 freeholders have now joined FHOA. As membership grows so does FHOA’s administrative burden. In 2005, FHOA hired a part-time administrative assistant. The position has since become full time. Concurrently, the acceptance of FHOA as a legitimate voice for freeholders has increased the burden on those of our volunteers with the technical knowledge needed to properly represent freehold owners. Unfortunately FHOA’s volunteer officers and directors have not discovered the fountain of youth. Finding replacements for these individuals with the skill sets necessary to fulfill FHOA’s mandate on a volunteer basis may be difficult or impossible. The association must find additional sources of revenue to replace its volunteers with paid technical/legal staff if FHOA is to continue to function.

FHOA does not want to raise the modest fees we charge for membership, information seminars or technical services as this could restrict access to those freehold owners living on fixed income who are perhaps most needful of our help. The decision to make this site only partially open to non-members of FHOA has been taken in an effort to increase revenues.

The governments of the prairie provinces have historically collected billions of dollars in freehold mineral tax directly or indirectly from individual freehold owners. We believe it would be appropriate for these governments to do more for freeholders than merely collect taxes. In 2010, the Alberta Government provided FHOA with one-time grant of $250,000 to be spent over two years in providing education and information to freeholders. FHOA is grateful for this funding which has been used primarily to hire media experts to assist us in updating this website.

But in Alberta the oil and gas regulatory authority takes the position that it has no role to play in situations where individual freehold owners have been deprived of their rightful share of royalties by their energy company-lessees and that such situations belong in the courts (see “The Role of Regulatory Authorities”). The Alberta Energy department takes a similar position.

Owners of surface rights in Alberta have access to the Surface Rights Board in situations where they have disputes with energy companies regarding their property rights. Surface owners also have access to Alternate Dispute Resolution (“ADR”) through the AER (formerly known as the “ERCB”). The issues which impact the property rights of Individual freehold mineral owners are far more technically and legally complex that those which impact surface owners but freehold owners have no access to ADR nor is there any ‘subsurface rights board’ in Alberta.

Individual freehold owners typically lack the technical and legal expertise necessary to recognize situations in which their property rights are violated by energy companies. Those that do recognize a problem seldom have the financial resources to engage in costly oil and gas litigation against powerful energy companies. This is a recipe for exploitation.

At a political forum held in conjunction with FHOA’s April 16, 2011 annual general meeting representatives of Alberta’s four main political parties were asked if their party supported providing FHOA with a tiny portion of the freehold mineral tax collected annually by the Alberta Government from freehold owners. Representatives of the Wildrose, Liberal and New Democrat parties supported such funding.

In November of 2011, the Government of Alberta announced the formation of Premier Redford’s Task Force on Property Rights which sought input from Albertans on “what property rights mean to them and what needs to be improved”1. FHOA was invited to make a presentation to the Task Force (see “December, 2011 Presentation to Premier’s Property Rights Task Force”, “Attachment – Dec. 2011 Presentation to Premier’s Task Force”). In its verbal presentation to the Task Force FHOA stressed the need for freehold mineral owners to have some form of less expensive recourse than the courts in disputes with energy companies.

The Report of the Task Force took note of the concerns raised by FHOA (see "Report of the Property Rights Task Force" pps. 5, 17, 18). However the response of the Alberta Government in introducing legislation to create a Property Rights Advocate reporting to the Justice Minister and Attorney General to share ”independent and impartial information about property rights and help people determine the appropriate resolution mechanism including the courts”2 does not address any of the concerns raised by FHOA. Freeholders already have access to the courts; we need a less expensive form of recourse.

The plight of individual freehold mineral owners is obvious to anyone who cares to become informed. It is part of our elected representatives’ job to be informed. The real question for our elected representatives is whether they are prepared to continue to collect hundreds of millions of dollars directly and indirectly from our pockets and look the other way as they have done for the past half century.

 

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End Notes:

1. November 24, 2011 Government of Alberta Press Release
2. February 22, 2012 Government of Alberta Press Release

Freehold Petroleum & Natural Gas Owners Association

"Freehold Owners Association"

208, 1235 17th Ave SW, Calgary, AB T2T 0C2 Telephone: 403-245-4438