Alberta’s energy ministry has disputed claims by a rural municipal leader that the government’s plan to ensure oil and gas companies pay their delinquent taxes is flawed.
“Remember when we were at RMA (Rural Municipalities of Alberta), everybody heard about when we came back from RMA about the oil companies had to pay their back taxes and all that?” Cypress County reeve Dan Hamilton put to his council this week.
“Well, the province put in if the companies are still paying their royalties to the province, they don’t care about the taxes.”
Read Also
Agriculture ministers agree to AgriStability changes
federal government proposed several months ago to increase the compensation rate from 80 to 90 per cent and double the maximum payment from $3 million to $6 million
Hamilton made the comments during the county’s council meeting while reviewing discussions at a regional meeting of southern Alberta mayors and reeves held April 14.
“As long as the companies are paying their royalties, they can keep on rolling,” Hamilton told councillors.
“That was a loophole that was hidden that they found afterwards. So, all that big hoopla at RMA was crap.”
However, this afternoon the energy ministry disputed the assertions made by Hamilton, stating the ministerial order put in place is not connected with royalties.
“Minister (Pete) Guthrie has directed the Alberta Energy Regulator to make the payment of owed municipal taxes a necessary condition for approval of licenses to oil and gas companies. This condition will be applied to all well licence applications and transfers,” read the statement.
The ministry did not respond to a question regarding whether payment of outstanding taxes will be a mandatory condition.
The RMA released a survey of its members revealing that as of the end of 2022, municipalities were owed $268 million in unpaid taxes from oil and gas companies.
Hamilton’s comments come less than a month after Alberta premier Danielle Smith, who is the MLA for Brooks-Medicine Hat, which includes Cypress County, addressed the issue of unpaid taxes at the RMA spring convention.
Rural municipal leaders heard of a new directive to the Alberta Energy Regulator at the convention that Smith reiterated.
“The new directive creates a condition where companies will not be able to transfer or get new well licences unless the regulators are satisfied the taxes have been paid,” Smith said in her address to the RMA.
“And we hope this is just enough of a stick to pay their taxes and to make sure the municipalities are made whole.”
A March 20 media release described the energy ministry’s directive as one that “strengthens the AER’s approach by making payment of municipal taxes a necessary and mandatory condition for approval, based on available data.”
A revised regulatory outline issued by the AER on April 13 about eligibility requirements for acquiring and holding energy licences states that outstanding tax and leaseholder payments “may” be used in determining whether a company poses an unreasonable risk.
Drew Barnes, the independent MLA for Cypress-Medicine Hat, said the state of the regulatory framework governing Alberta’s oil and gas industry was thrown into chaos following the Supreme Court’s Redwater decision.
The 2019 decision ruled that a company’s environmental liabilities took precedent over secured creditors when oil and gas businesses go bankrupt and assets are dispersed.
Barnes said the government had the ability to address the issues that the Redwater decision exacerbated as well as unpaid municipal property taxes owed by oil and gas companies and landowners who haven’t been paid surface leases by the sector.
“It’s up to the provincial government to make sure that relationship between oil and gas and landowners and the public — the people that own the resource — is strong,” said Barnes, who was elected as an UCP MLA but was booted from the caucus for his outspoken criticisms.
“And we’ve seen four years where the UCP government has neglected to use their time, their majority in the legislature.”
The Western Producer will have more on this issue as the story unfolds.
Contact: alex.mccuaig@producer.com
