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The Indian Oil and Gas Act is the legislative tool for the federal government to manage and administer the exploration and production of oil and gas resources on reserve lands.
Indian Oil and Gas Canada is the special operating agency within Indian and Northern Affairs Canada mandated to fulfil the Crown’s fiduciary and statutory obligations related to the management of oil and gas resources in First Nations.
On reserve, oil and gas activity is a significant source of capital and provides access to economic development opportunities for approximately 200 First Nations with oil and gas production, or potential production, opportunities. Over 80 per cent of First Nations oil and gas production occurs in Alberta. In 2005-2006 alone, over $270 million in oil and gas revenues were collected on behalf of about 60 First Nations with active petroleum agreements. These monies are collected by Canada and 100 per cent is released to First Nations pursuant to the Indian Act. For these First Nations, this revenue and increased access to oil and gas-based economic development opportunities improve their potential for increased self-reliance.
The oil and gas industry is becoming increasingly complex. Off reserve, the provinces have been more adept in responding to industry and technology changes. As an example of their capacity to respond, the Alberta Mines and Minerals Act and its accompanying regulations have been amended approximately 15 times since the mid-1970s, while the Indian Act has remained virtually unchanged since 1974.
Modernizing the Indian Oil and Gas Act and its associated regulations is intended to eliminate the existing regulatory gap. Levelling the playing field between off-reserve and on-reserve oil and gas activities will reduce barriers to economic development and will allow the federal government to better fulfill its obligation to manage oil and gas resources on First Nations lands.
The proposed changes provide solutions to two specific problem areas. First, they respond to immediate needs related to the day-to-day management of First Nation oil and gas resources by modernizing the current regime. Second, enhancements to Governor-in-Council regulation-making powers would facilitate the continuous improvement of the regime in response to industry and technology advances.
The core areas for change addressed in the proposed amendments to the Act are regulation-making powers, audit powers, limitation period for actions to collect amounts owing, determination of royalty payments, a comprehensive enforcement system comprised of fines and penalties, a remedy for trespass, environmental protection, and authority to issue replacement leases for lands added to reserve.
A key policy objective for the Government of Canada is to modernize the legislative frameworks that support First Nations programs, services and governance. The proposed legislation will modernize the regulatory regime for oil and gas activities on reserve lands making the federal authority more transparent and accountable. Harmonizing and regularizing on- and off-reserve regulation of oil and gas exploration and production will reduce barriers to economic development for First Nations.
In providing an efficient and effective oil and gas regulatory regime, this proposed legislation continues to fulfil the Government of Canada’s responsibility to manage oil and gas resources on behalf of First Nations.