BARRHEAD – Woodlands County councillors hope to pressure the government to do more to help municipalities recover unpaid property taxes from energy companies that are defunct, but whose assets have been bought by other entities.
And that is why councillors, during their Feb. 1 meeting, voted to join the County of Stettler in writing Premier Danielle Smith, Energy Minister Peter Guthrie and Municipal Affairs Minister Rebecca Schulz to bring to their attention the difficulties municipalities face in collecting taxes from defunct energy companies.
Specifically, the counties expressed their concern that they could not recoup any property taxes owed to them from the receiver appointed to oversee the assets of Trident Exploration, a Calgary-based natural gas company that abruptly ceased operation in May 2019.
Chief administrative officer Gordon Frank told councillors that the previous council authorized administration to attempt to try to recoup some of the taxes owed to the municipality through legal channels, adding that the receiver of the bankrupt company's assets, PricewaterhouseCoopers, had collected roughly $1.2 million from the sale of Trident's assets.
"Unfortunately, when we (Woodlands County and Stettler County) went to the courts, while (the judge) understood our concerns, he ruled in favour of the OWA (Orphan Well Association) and the AER (Alberta Energy Regulator)," he said.
Frank added he chose not to appeal the decision as the likelihood of success was low, adding their lawyer suggested that the municipalities pen a letter to the premier and appropriate ministries informing them about the decision, specifically highlighting Court of King's Bench justice Richard Neufeld's comments.
The AER is a non-governmental organization whose mandate is to ensure that energy development in the province is efficient, environmentally responsible and safe.
The OWA is an independent non-profit organization that operates under the delegated legal authority of the AER. Its mandate is to safely decommission orphan oil and gas wells, pipelines and production facilities, and restore the land as close to its original state as possible. The OWA’s funding comes primarily from the upstream oil and gas industry through annual levies administered by the AER.
In his 14-page ruling from Dec. 13, 2022, Neufeld stated that while he did not accept the municipalities' request to share in the remaining funds, he agreed with their premise that the non-payment of certain oil and gas assets that are shut-in pending sale or transfer to the OWA “appears to place rural municipal governments in a very unfair position” vis-à-vis the province.
He also noted that the provincial assessor includes such assets when determining the assessed value of properties in a rural municipality and only removes them after abandonment is complete.
"Municipalities must use those assessed values in setting taxes for their ratepayers to meet their budgetary requirements and education-related remissions (school requisition or education tax) even if they may have no opportunity to recoup taxes from the assets in question," Neufeld said.
"It seems to me that there is a structural unfairness at play here from a municipal taxation and finance perspective between the provincial government and rural municipalities. If that is the case, it needs to be addressed by the province of Alberta."
In the draft letter to the premier and ministers Guthrie and Schulz, the municipalities state that Trident Exploration owes an estimated $7 million in taxes to Woodlands County and the County of Stettler. Although the letter does not break down how much is owed to each municipality, at its Jan. 11 meeting, County of Stettler council approved a resolution to write off $4.8 million in unpaid property taxes owed by Trident.
It is also worth mentioning that the natural gas company also owed the County of Barrhead $1.7 million in back taxes and late penalties.
Frank added the county is looking to meet with Schulz regarding their ongoing dispute with the Town of Whitecourt in coming to an Intermunicipal Collaboration Framework agreement with the Town of Whitecourt.
"If we do meet with the minister, this needs to be the second issue because the courts have recognized that the playing field isn't fair and if all the oil and gas companies do not honour their commitment with the municipalities, the (provincial government) needs to step in.," he said.
Goose Lake/Freeman River Coun. Peter Kuelken added it is not just a matter of the taxes that energy companies owe to municipalities, but the money they owe to landowners with abandoned wells on their properties.
.jpg;w=120;h=80;mode=crop)
