Alberta premier promises new process to clamp down on delinquent oil and gas operators
Municipalities to act as ‘early warning system’ for regulator, Danielle Smith says
Alberta Premier Danielle Smith is promising new consequences for oil and gas operators who fail to pay their municipal taxes, as delinquent companies continue to fall behind on payments.
A new complaints process will see Municipal Affairs act as a middleman between regional governments and the Alberta Energy Regulator (AER), Smith said Wednesday during an address to the Rural Municipalities of Alberta spring convention in Edmonton.
The strategy for collections will rely on municipalities to quickly point the finger at companies who have failed to pay up.
"You will be the early warning system for us that there is a bad actor out there," Smith said.
"We welcome you telling us if somebody is not paying their taxes because I can tell you, some of the things that we've observed, we are going to stop."
Consultations that began last year have shown Alberta's current process to collect outstanding debts "isn't working," Smith said.
A member survey for the RMA, which represents 69 counties and municipal districts, found that, as of Dec. 31, 2024, at least $253.9 million of municipal property taxes have gone unpaid by oil and gas companies.
Details of the new enforcement process are expected to be released in a couple of weeks.
CBC asked the AER for comment on the proposed changes and how companies would be compelled to make their tax payments. In response, a spokesperson for the energy regulator said questions should be directed to the premier's office.
'Get it paid'
The new system will rely on the AER to make a call on any outstanding bill and "get it paid," Smith said.
"That, or there will be consequences. And there are a lot of tools at AER to have consequences," Smith said.
"We had a framework for how we wanted it done, but we had some process steps missing. We're going to fix those process steps."
For more than a decade, municipalities have been calling on the province to help them collect unpaid taxes. Amid a surge in industry insolvencies, the RMA has said its members have few ways to hold companies accountable and recoup their losses.
In 2024 alone, unpaid oil and gas property taxes owed to rural municipalities grew by $67.8 million, more than 50 per cent higher than the outstanding taxes owed the year before.
The province has previously promised to crack down with improved reporting measures, urging municipalities to provide company names and nominate operators for enforcement.
On Wednesday, Smith blamed procedural issues for the mounting losses municipalities face. She urged local government leaders to work more closely with province to collect on their debts.
Describing how the new policy will work, she said that when a company falls behind on its taxes, the municipality should immediately notify Municipal Affairs, which will verify it and forward it to the AER.
More regular reporting to the ministry will ensure the regulator can act quickly to circumvent permits and withhold approvals for companies in poor financial standing, Smith said.
"I had been told that you were kind of bundling them up and sending them every 90 days," Smith said of the current arrears reports being filed by municipalities.
"That's part of the problem. If you send a whole pile of them all at once, it's hard to verify them and then with the passage of time, you're not getting paid in a timely way."
'No recourse'
It isn't clear how the policy would alter AER enforcement measures. The government has previously directed the regulator to not issue new oil well licences or licence transfers to companies that owe more than $20,000 in unpaid property taxes.
The RMA has described the issue as a growing crisis, and has called on the province to establish a working group to create a property tax accountability strategy to address the issue of unpaid oil and gas taxes. Municipal leaders say government measures to date have fallen short, leaving rural municipalities to shoulder the growing financial burden.
In an interview Tuesday, Vulcan County Reeve Jason Schneider said the province needs to close loopholes in the system that allow delinquent companies to continue to operate.
He said there is currently no mechanism for municipal governments to compel payments or act as a creditor in bankruptcy proceedings before insolvent companies "disappear" from Alberta.
"There is no recourse," he said. "As a municipality we just have to sit back and hope that the cheque comes in the mail."
Schneider said Vulcan County, southeast of Calgary, is due more than $9 million in unpaid taxes. In response to the shortfall, services to residents have been cut by 30 per cent, he said.
"We had to let people go, we had to reduce what we do and it hurt. It hurt a lot."
WATCH | Vulcan County feeling the loss of tax revenue:
On Wednesday, Municipal Affairs Minister Ric McIver told the RMA convention the province shares those frustrations.
Any other business, outside the energy industry, that does not pay its tax bill would be forced to shut down, McIver said.
"The bad actors persist," he said. "They give the whole industry a bad reputation and I don't know why they're allowed to keep operating. I just don't."
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