County can impose business licence on energy firms: study
The verdict is in: Mountain View County can impose a business licence on energy companies to recoup costs for road repairs.
That was the conclusion reached by two University of Calgary Faculty of Law graduates who undertook a study of the question for county administration.
“Nothing we discovered cast any doubt upon this, nor did anyone we speak to dispute this,” wrote Scott Mcleod and Omar Chehade, graduate students who specialize in energy law.
The students were approached to research the question after council asked administration to explore any ways available to charge oil and gas companies for the damage caused to county roads by heavy vehicle traffic.
Presenting their findings to council’s policies and priorities committee last week, economic officer Doug Erdman said the county could go even further than implementing a fee for service.
“In addition to that we can levy a tax … for wear and tear to the roads,” Erdman said. “If our goal is to have them leave the roads in the same condition they found them, we have to look at depreciation.”
The fee schedule could be based on the number of trucks being used on a particular exploration job, he said.
Asked whether the county should expect pushback from industry if it moved to impose the licensing system, Erdman said: “Yes, we can expect a certain amount of pushback and we should be prepared for it.”
Div. 6 Coun. Paddy Munro, whose call last year to “whack the fracs” brought the issue to a head, said he would like to see a business licence as well as a system similar to the Community Aggregate Payment (CAP) that’s levied on sand and gravel operators.
“I really believe we have to work on a reasonable business licence plus something on top of it, like CAP,” Munro said.
Reeve Bruce Beattie said he was “extremely disappointed” by the lack of response from government agencies contacted by the authors of the study.
With the provincially regulated well drilling equipment tax set to expire at the end of 2012, Beattie said the licence fee could be introduced to replace it. The wellhead tax raised about $800,000 for the county this year alone.
As a next step, administration said, post-secondary students could be enlisted to conduct a cost-benefit analysis to determine the amount of depreciation to roads due to the energy sector.
“If we can identify the depreciation due to the oil industry and the tax is reasonable … we can certainly justify having a business licence so the depreciation is paid for,” Erdman said. “That’s the whole idea of having a business licence.”
Asked by Munro how the CAP fee was determined, administration said the sand and gravel industry calculated the rate.
“Industry was involved in developing a fee they thought would be appropriate,” said Jeff Holmes, director of legislative, community and agricultural services.
“That’s what we gotta do,” Munro said. “Sit down with everyone and find a solution so we don’t spend 20 years in court.”
“That would be a very good approach,” Holmes said.
The discussion will be resumed next month at P&P.