Recently, a collection of Albertan freehold mineral rights owners have come together to voice their displeasure at how certain energy companies operating on their land have been treating them.
In the current system, “production is obtained from the lands by a producer and under the terms of their leases, and they are to pay taxes on this production to the Government. If they do not, the individual must pay it or the Government can take the mineral rights through the tax default provisions of their Acts. This follows on the surface rights owners that have not been paid and that recently been in the press. The surface owners have recourse through the Surface Rights Board, however, mineral owners are not afforded the same support from the Government,” said Dennis Eisner.
Eisner is on the Board of the Freeholders Owners Association (FHOA), a non profit organization established to help the owners of mineral rights in Alberta to address issues relating to their mineral rights.
Their issue has picked up steam in the mainstream media. CTV News recently did a piece outlining FHOA’s argument:
What’re more, FHOA recently published an open letter to Alberta Premier Rachel Notley describing what to them seems an act of injustice on the part of energy companies. See the letter below:
AN URGENT OPEN LETTER TO PREMIER RACHEL NOTLEY FROM THE FREEHOLD OWNERS ASSOCIATION (“FHOA”)
Madam Premier, please stop the bureaucrats in Alberta Energy from further exploitation of citizens including vulnerable seniors!
Our forefathers, this Province’s pioneer settlers, broke the land under harsh circumstances and earned the right to any oil and gas beneath their homesteads. Now, more than a century later, Alberta Energy bureaucrats are threatening to expropriate without compensation the property rights which we have inherited. Why? According to the bureaucrats “We’re just doing our jobs” and enforcing the regulations.
Your government was elected on a platform of social justice and fairness. When senior Alberta civil servants recognize that enforcing a regulation is creating an injustice, their job is to take steps to change the regulation, not just express sympathy to the exploited while they blithely sip their lattes and admire their bloated pay checks.
We own approximately 4% of the oil and gas rights in Alberta. There are an estimated 75,000 of us. The vast majority of us are ordinary citizens with no training or experience in the complexities of oil and gas exploration and development. As laymen, we find ourselves at a tremendous disadvantage in our dealings with the technically sophisticated energy companies that lease our property and sometimes drill and produce oil or gas and pay us a small royalty on production.
Alberta Energy taxes the production from our property. Taxpayers rightfully expect something in return for the taxes they pay. Since the turn of the millennia, the Alberta Government has collected an estimated $357 million in freehold mineral tax from our properties. Alberta Energy provides us with no services or assistance whatsoever in return for this tax. Queries to Alberta Energy or to the Alberta Energy Regulator from individual owners of oil and gas rights are re-directed to FHOA – a volunteer not-for-profit association. The only thing we receive from Alberta Energy is an annual invoice advising of the amount of freehold mineral tax payable. That is not fair!
Before it was elected, the NDP recognized that it was not fair and pledged to support the allocation of a small portion of the freehold mineral tax collected annually by Alberta Energy to FHOA to support the association’s efforts to provide information and education to individual owners of oil and gas rights. Sadly, this pre-election pledge has not been honoured.
Ongoing low oil and gas prices have impacted all Albertans. Production royalties on the oil and gas rights owned collectively by the people of Alberta and by those owned by individuals have been drastically reduced. Although the oil and gas industry is suffering, most oil and gas companies have continued to honour the lease agreements under which they produce. However, some foreign-controlled companies that have leased our individually-owned oil and gas rights have stopped paying royalties completely even though they continue to produce from our properties. They have also apparently stopped paying their share of freehold mineral tax on production from our oil and gas rights to Alberta Energy.
Good governments protect the property rights of their citizens. Having paid Alberta Energy millions in taxes on production from our property, we would expect the Government to help us to rectify the situation. Not so!
Some individual owners of Alberta freehold oil and gas rights are senior citizens who rely on modest royalties from their oil and gas rights to supplement their Canada Pension Plan and Old Age Security benefits.
How would you feel Madam Premier if you were one of those vulnerable seniors and the oil and gas company that held your lease had decided to stop paying you royalties, but continued to produce your oil or gas? And what if you then received a letter from Alberta Energy stating that the company had not paid the freehold mineral tax which was due on April 25, 2016 and that you are required to pay both your share, and the company’s share of this tax together with interest calculated from the due date, or your mineral rights would be forfeited to the Government. Madam Premier that is exactly what is happening! Do you think that it is fair or that it in any way could be construed as social justice?
The final default notices can be served at the pleasure of the Government which speaks to the urgency requiring you to address the potential of this grievous act immediately.
And this is just the most recent blatant example of Alberta Energy’s exploitive relationship with the individual owners of oil and gas rights in this Province.
FHOA urged its membership to support the NDP in the last election because of your social justice platform. We commend your Government for the positive steps taken in many areas to date. Can we count on you to address these matters and create an environment in which citizens can rely on your Government to protect their property rights, not exploit them?
On behalf of Alberta oil and gas rights owners,
Freehold Owners Association