Municipalities to Regain Special Lien Powers on Oil and Gas Properties

On October 28, the Government of Alberta introduced Bill 77: Municipal Government (Restoring Tax Accountability) Amendment Act, 2021. If passed, Bill 77 will amend the Municipal Government Act (MGA) to provide municipalities with the ability to place special priority liens on linear property and machinery and equipment as a means to recover unpaid taxes from the applicable property owner or operator. These lien provisions will authorize seizure of property as a recovery mechanism. Alberta Municipal Affairs has provided a short fact sheet outlining the changes made through Bill 77 and the proposed special lien process.

Municipalities previously held such powers before losing them as a result of the 2019 Northern Sunrise County v Virginia Hills Oil Corp Alberta Court of Appeal decision. The Bill 77 amendments to the MGA return these powers.

The province also plans to extend the Provincial Education Requisition Credit (PERC) program, which allows municipalities to defer payment to the province of uncollectible education property taxes on delinquent oil and gas properties, an additional 2 years to the 2023 tax year. The extension of this program is intended to assist municipalities as they transition to using the special lien.

AUMA has supported RMA in emphatically advocating for the province to legislate tax recovery mechanisms for municipalities given the ongoing issue of property taxes for a significant number of oil and gas properties not being paid. Both associations are pleased that the province has responded with the introduction of Bill 77. Returning the special lien powers to municipalities should help to increase industry accountability in relation to property tax payments, and places industry on a more level playing field with other commercial property owners, as well as residential property owners, in terms of the potential consequences of not paying municipal property taxes.

While Bill 77 is an important step in the right direction, special liens alone will not solve the ongoing unpaid property tax challenges facing many municipalities across the province, and in some cases the lien process may be very difficult for municipalities to implement. Ultimately, further action is needed at the provincial level to effectively regulate and hold the oil and gas industry accountable, as non-payment of property taxes not only impacts municipalities but may also be an indicator that a company is unable or unwilling to fulfill other environmental and regulatory requirements and should be treated as such by provincial regulators.

Please continue to follow AUMA’s weekly Digest for updates on changes to property assessment and taxation legislation and the province’s regulation of the oil and gas industry.