+ RMA Rural Municipalities
of Alberta

Resolution 11-19F

Requirement for Municipal Authority Input on Energy Resource Development Projects

Date:
November 1, 2019
Expiry Date:
December 1, 2022
Active Status:
Active
Sponsors:
MD of Bonnyville
District:
5 - Edmonton East
Year:
2019
Convention:
Fall
Category:
Energy
Status:
Intent Not Met
Vote Results:
Carried as Amended
Preamble:

WHEREAS the Government of Alberta seeks to ensure that members of the public are informed about proposed and existing energy resource developments and can provide input regarding those developments; and

WHEREAS the Alberta Energy Regulator (AER) has the authority to choose to direct energy project applicants to modify or supplement their public consultation activities; and

WHEREAS rural municipalities constitute the largest land base in Alberta, and therefore, have relevant and profound knowledge applicable to commercial and industrial developments in their respective municipalities; and

WHEREAS local government is the closest level of government to the people; and

WHEREAS landowners expect municipal authorities to protect the interests of private and public lands within their boundaries on any matter including energy resource development projects; and

WHEREAS the current AER public consultation process renders municipal authorities ineffective at protecting the interests of private and public lands, which is eroding landowner/public trust in provincial and local government;

Operative Clause:

THEREFORE, BE IT RESOLVED that the Rural Municipalities of Alberta request that the Government of Alberta directs the Alberta Energy Regulator to incorporate municipal authorities’ input into the energy resource development project and change of use approval process.

Member Background:

The Municipal District of Bonnyville (MD) experienced an immense wave of energy resource developments starting in 2013 (i.e. one northern section of land within the MD has over 2,400 assessed well sites in the 2019 tax year). This year there are over 11,500 active well sites assessed within the municipality.

Up until 2013, most of these energy developments were in the north of the municipality where titled lands are limited. Their remote nature allowed the Alberta Energy Regulator (AER) to approve projects easily as there were no adjacent landowners to declare adverse effects. However, because the MD is reaching a saturation point within that region (as are many rural municipal authorities), these energy developments are gravitating to more populated areas closer to individual ratepayers/landowners. This is evident in the increased number of submitted Statements of Concerns from these landowners to the AER.

The MD’s Planning and Development Department also has had a growing number of adjacent or concerned landowners requesting advice, direction, and support to oppose these energy developments. They recognize that they are not experienced in these matters nor do they understand the nature of AER’s regulatory approval process. They believe that because they pay their property and provincial taxes, their municipal authority (who is a creature of the provincial government) will advocate on their behalf to protect the local environment and specifically, their land.

This land protection service expectation has been expressed repreatedly. This has led the MD to conclude that the AER approval process should become a facilitated process for local ratepayers, or that municipal authorities should be granted the ability to submit a Statement of Concern on any energy resource development application within their boundaries.

Currently, the municipal authority is powerless to meet their landowners’ service expectations because based on the AER approval process requirements, a municipal authority cannot illustrate a direct adverse effect unless it has municipal infrastructure adjacent to the energy development project. Therefore, the municipal authority is unable to advocate for any individual landowner who may request their assistance.

Given the cyclical nature of the energy development industry, there is an opportunity during the current downswing to be proactive and improve the AER approval process before more energy development applications encroach on titled lands. In lobbying for change now, Rural Municipalities of Alberta will be helping their members proactively prepare for the future based on the past.

In June 2019, the Government of Alberta released a draft Public Involvement Directive for feedback and comment that incorporates municipal authority notification in the AER Project Application Process (specifically, Section 3, subsection 6). Also included are specific engagement and consultation requirements for local Indian reserves and Métis Settlements (Section 3.2 and Section 4.2). The MD proposes that municipal authorities should also be specifically identified for engagement and consultation in a similar manner.

Private landowners need and want a facilitated public consultation process for AER approvals to bring back confidence and trust in government and the AER approval process.

RMA Background:

5-18F: Alberta Energy Regulator Requirements for Acquiring and Holding Energy Licences and Approval

THEREFORE, BE IT RESOLVED that the Rural Municipalities of Alberta advocate that the Alberta Energy Regulator (AER) be required to ensure that there are no outstanding municipal property taxes before licenses are transferred, including licensed properties declared as “Orphan Sites”; and

FURTHER BE IT RESOLVED that outstanding property taxes form part of the liability rating for oil and gas companies; and

FURTHER BE IT RESOLVED that oil and gas companies be required to post deposits in the amount of all outstanding municipal property taxes before they can apply for a license or transfer, and that these deposits are forwarded to the municipality from the AER upon the approval of the license or transfer.

DEVELOPMENTS: The Government of Alberta response indicates that although many factors are considered during the process of reviewing and approving a license transfer and within the AER’s liability management rating (LMR), payment of municipal property taxes is not among them. RMA appreciates that Alberta Energy is working to improve the LMR and overall liability management system and is considering input from RMA and Alberta Municipal Affairs related to the extent to which outstanding municipal taxes should be considered part of a company’s LMR. However, as rural municipalities are faced with mounting unpaid taxes related to oil and gas infrastructure, this issue must be addressed urgently.

RMA is also concerned with AER’s comments that imposing conditions on license transfers due to unpaid municipal taxes is beyond their jurisdiction, while also encouraging municipalities to intervene in the transfer approval process due to unpaid taxes. Based on the response, it is unclear what purpose this would serve, as it appears that AER could not alter the transfer approval process due to unpaid municipal taxes.

According to a 2019 RMA survey, rural municipalities are currently facing a deficit of between $81 million and $96 million in unpaid property taxes from the oil and gas industry. Based on the Government of Alberta response, there are no current provisions available in the transfer approval and liability management systems to address unpaid municipal taxes, and limited interest in expanding either process to do so. Given that lack of payment of municipal taxes is often a sign of financial distress for companies, and may lead to further abandonment of other commitments, RMA urges the Government of Alberta to include this within the scope of the AER (as they are the primary oversight body for oil and gas operations in the province).

This resolution is assigned a status of Intent Not Met, and RMA will continue to advocate on this issue.

5-17F: Alberta Energy Regulator – Amendment to Transfer Approval Process

THEREFORE, BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties (AAMDC) requests the Government of Alberta amend the Municipal Government Act (MGA), and other provincial legislation, regulations and policies, including AER Directive 006: Licensee Liability Rating (LLR) Program and Licence Transfer Process to:

  • broaden the tax recovery power of municipalities to collect linear property taxes, Alberta housing foundation requisitions and Alberta school requisitions owing on oil and gas operations, and
  • provide the Alberta Energy Regulator (AER) the ability to include municipal tax compliance as part of the specified list of AER requirements before license transfers will be considered;

FURTHER BE IT RESOLVED that the AAMDC request that Alberta Energy direct the AER that prior to refunding any security deposits, check with all municipalities in which the company requesting the refund had leases in, to ensure property taxes are current.

DEVELOPMENT: RMA appreciates the recognition and the multiple steps being taken by the Government of Alberta to address the challenges faced by municipalities as a result of oil and gas operators who are have not payed property taxes. At this moment, however, there has been only limited improvements for municipalities through the Provincial Education Requisition Credit (PERC) program which only applies to the education property tax portion of the unpaid linear oil and gas property taxes. Until the amendments listed in the resolution are made, or more substantial improvements to the overall liability management system are provided, this resolution is assigned a status of Intent Not Met.

Government Response:

Alberta Municipal Affairs

Alberta Municipal Affairs has no input on this resolution, as it is within the mandates of Alberta Energy and the Alberta Energy Regulator.

Alberta Energy

  • The AER’s approval process provides several opportunities for municipal input to be heard and incorporated into energy development approvals.
  • Energy refers this resolution to AER.

Alberta Energy Regulator

  • Engagement with municipalities is part of a project life cycle. When a company decides to initiate an energy project, it must plan the project, engage stakeholders and indigenous communities, and obtain AER approval before any development can happen.
  • The company must first notify anyone who could be affected by the proposed development. Companies are also encouraged by the AER to seek feedback from stakeholders, including municipalities, about proposed projects and to address any concerns early in the process.
  • Municipalities can participate in the AER’s decision-making process on energy development, by:
    • submitting a statement of concern for us to consider during our review of an application, and
    • participating in AER-Ied alternative dispute resolution (ADR) , and
    • participating in an AER hearing (if their request to participate is approved by the AER).
  • The AER has also explored other ways to address concerns expressed by municipalities. This includes proposing a new directive on public involvement.
  • This work has been in development since 2017 with extensive stakeholder engagement including input from municipalities and members of the RMA.
Development:

The Government of Alberta response indicates that municipalities already have an opportunity to participate in the AER project-approval process through the submission of a statement of concern or request to participate in a public hearing. However, the background to resolution 11-19F indicates that these current methods are limiting as they require a municipality to be adversely affected, which requires that the project directly impact municipal infrastructure. The resolution refers to the need for AER to broaden the circumstances in which municipalities can provide input to empower municipalities to advocate on behalf of local property owners who may be adversely affected by a project but lack the ability to participate in the project review process individually.

The AER has indicated that municipalities will be expected to address unpaid tax concerns through the same statement of concern process. This is problematic as monitoring the AER website for approval hearings is administratively burdensome, and it is doubtful that the AER will consider a municipality’s concerns about a company’s tax payment record in other municipal jurisdiction as an issue that has a “direct and adverse” impact on the intervening municipality. A preferred approach is an ongoing partnership between the AER and municipalities to regularly share this information. RMA made a specific request for this type of relationship but to this point the response from the AER has not been positive, as their preference is to rely on industry self-reporting of unpaid taxes and require municipalities to participate only through the statement of concern process.

As the resolution makes clear that current municipal participation processes are not adequate to address municipal and landowner concerns with energy projects, this resolution is assigned a status of Intent Not Met, and RMA will continue to advocate on this issue.

Provincial Ministries:
Energy,
Municipal Affairs
Provincial Boards and Organizations:
AER
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