Indigenous and Northern Affairs Committee on March 12th, 2009

[John Snow]

We are located 45 miles west of the city of Calgary, in the foothills, and the main reserve that we are located in is Morley, Alberta. We also have two other reserves, the Bighorn Indian Reserve in the area of Rocky Mountain House, as well as the Eden Valley Indian Reserve in the Turner Valley area.

So we have three reserves. We're the only first nation having three reserves traversing the eastern slopes of the Rockies. It's about 150 miles between each reserve, so we're interspersed. We are the only first nation like that in the country.

Thank you, Mr. Chair.

[Marc Lemay, Bloc, Abitibi—Témiscamingue, QC]

When oil was discovered there, the reserves were already established. So oil was discovered on your aboriginal lands.

At first, did you take part not only in the discovery, of course, but more particularly in the harvesting of that resource?

[John Snow]

Mr. Chairman, thank you for the questions.

Some of the first wells were discovered in that area in 1928, preceding any type of regulator or institution. So we were not involved yet, even though there were activities happening on our lands. If you go today to the IOGC, you will see some pictures on their wall from 1928. Those are actual drilling rigs from 1928 that were drilled on Stoney lands.

Apart from that, and to follow up with supplementary point on your question, yes, oil was discovered in Turner Valley. It was not regulated properly. In fact it was burned off and wasted. There is a fire there that has never been put out, but still goes on. They call it “hell's half acre”, and it's part of the history of Turner Valley right now. We're not far from there.

So activities occurred without our involvement and, in many instances, there was much wastage. That's a bit of the history.

[Marc Lemay, Bloc, Abitibi—Témiscamingue, QC]

For how many years have your communities been consulted on oil and gas exploitation on your reserves, on your ancestral lands?

[John Snow]

I can answer that in a general way, Mr. Chairman.

Our communities were initially approached when the activity began in Morley, and that would have been in the late sixties, or 1968-69. At that time, they had created a group called Indian Minerals West, which eventually became Indian Oil and Gas Canada.

So the consultations began formally with producing first nations like the Stoneys in and around the late sixties and early seventies.

[Marc Lemay, Bloc, Abitibi—Témiscamingue, QC]

This next question may perhaps be off topic. Nevertheless, the 1988 Winter Olympic Games were held in Canmore, on your lands. I was there. You were involved in the organization of the 1988 Olympic Games.

I want to know whether the amendments you are proposing today will result in more control than is currently exercised by the Indian Oil and Gas Canada Co-Management Board of Directors? What would change, fundamentally, if we agreed to all the amendments? Would there be more control?

[John Snow]

At this time I'd like to ask legal counsel to answer that in part, but I'm thinking and hoping that what we're doing is helping to clarify part of the process and part of the relationship. That's what we would like to do through these amendments.

As we were saying, we don't want to derail or diminish or replace the bill. At this time, we're looking for clarity, because with all the resources that were spent on this project, we need to ensure that we have clarity. If you look at the definitional aspect of some of the issues that are arising, whether it's oil, operators, or contracts, there are many definitions across many jurisdictions. Because it's not clear, it leaves room for uncertainty for first nations, for government, and for the oil industry.

So if we just had clarity, I think it would better for us.

[Marc Lemay, Bloc, Abitibi—Témiscamingue, QC]

I have a problem. I'm going to explain it to you. I'm going to tell you why I have this problem.

It seems to me—your legal counsel can correct me if necessary—that you're going this far into the details in an attempt to close so many doors that, if we put that in the act, when it could be in the regulatory power... There is a difference between the act and the regulations. In the case of the act, you have to come here to amend it, whereas it's much easier in the case of regulations.

I have some serious questions. Why wouldn't we try instead to include your draft amendments in the regulations under the act instead of trying to amend the act?

[The Chair, Conservative, Bruce Stanton]

A brief response, please.

[Douglas Rae]

Mr. Chairman, we would prefer that the details be enshrined in the bill, not in the regulations. We'd prefer an open debate on the statute itself.

Regulations, it is true, can be amended very easily--perhaps too easily, from the point of view of the first nations of Stoney Nakoda First Nations. These are fundamental issues dealing with millions of dollars in royalty moneys payable to the first nations. Through past experience, we know that regulation-making power has not always resulted in beneficial regulations for the first nations.

So you're quite correct; we would prefer that the details, as much as possible, be enshrined in the statute itself, not in the regulations.

[The Chair, Conservative, Bruce Stanton]

We will go now to Ms. Crowder, for seven minutes.

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

Thank you, Mr. Chair.

I want to thank the chiefs, Mr. Snow, and Mr. Rae for coming before the committee. I think it's important that you are here in person to talk about the issues that you think need to be raised in the context of this particular piece of legislation.

I want to touch on two things. If I have time, I'll come back to a third question.

In your proposed amendments, you talk about the differences between the Canada Petroleum Resources Act and what is included in the bill. I think it's an unfortunate statement that the Government of Canada looks at royalties for itself in one way, and then treats first nations completely differently.

This is one proposed amendment: “5.2 (1) The Minister may, at any time, assess the royalty, interest or penalties”, and so on. I wonder if you could just briefly touch on the difference between the CPRA and what is proposed in Bill C-5. I don't know, it may be technical; keep it simple for us non-lawyers.

[Douglas Rae]

The comparison with the Canada Petroleum Resources Act is a valid one. In that statute, Canada is dealing with its own royalties. Listed in considerable detail--in the statute itself, by the way, not in the regulations--are the powers of the minister when royalties are underpaid or when another default takes place in the lease. Bill C-5, as it currently is worded, has nothing in that regard at all. It's entirely left up to the regulation-making power.

We're simply pointing out that what is good for Canada under the Canada Petroleum Resources Act should be good for Canada on behalf of the first nations in Bill C-5.

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

That would seem to be an absolutely reasonable approach. If Canada treats the money that comes to its own coffers as a source of revenues so carefully, it would seem reasonable that, in a trust relationship, on behalf of first nations, it would also ensure the same kind of activity.

Do you have sense of why there is this difference?

[Douglas Rae]

No.

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

It just seems to me that it's a continuation of our relationship that does not respect the full entitlement of first nations to resources on their own territories. That's just a comment.

I want to stay with the royalties for a moment. A letter was sent on behalf of the Stoney Nakoda Nations on February 19. It talks about--as you referenced in your presentation--the following:

Just last year the Canadian taxpayer was forced to pay royalties that Canada, through Indian Oil and Gas Canada, declined to collect, for reasons unknown, from the oil and gas producers on Stoney Nakoda lands. The Canadian taxpayer has thus subsidized these oil and gas producers on Indian reserve lands.

Then there was the news story about the trust policy that hurts reserves in the Samson and Ermineskin first nations. It's a slightly different issue, but the Supreme Court ruled on the fact that the Indian Act applied in terms of the investment of that trust. Even though we know that the government earned far more on that money, they paid the first nations at a different rate. Essentially, my understanding of what the ruling said is that even though it may not have been fair, it complied under the Indian Act, so they had to rule against the nations.

So we have two issues here. We have a responsibility on behalf of the government that does not invest the money and pay the first nations the full money that they actually earn on that money. We also have a case where the Government of Canada actually pays the royalties on behalf of an oil and gas company that, to my understanding, defaults.

I wonder if you could comment, in layman's terms, on what specifically needs to change around the payment of these royalties.

[Douglas Rae]

What needs to change is that the laws applicable to the calculation and payment of royalties should be in force to the full amount. The Stoney Nations don't feel that has been done in the past.

The example of the TOPGAS situation, which we enclosed with our letter, is just one example of that, in our view. And the proposed amendments that we're putting before you are designed to ensure that 100% of the royalties are paid in the future.

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

Do I still have time?

[The Chair, Conservative, Bruce Stanton]

You still have two minutes.

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

In your presentations, Chief, you mentioned that there are at least eight outstanding law cases that you're aware of. Can you tell me roughly what kinds of issues are in those cases? Is it again around royalties?

[Douglas Rae]

Yes, primarily.

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

I assume that there's a range of issues in those cases, around the royalty payments, but it sounds like the underlying theme must be that the government is not.... And this is not directed at the Conservatives. This is Conservatives and Liberals. This is not the current government. C'est la même chose; it doesn't matter which one is in power.

It's a long-standing issue around the fact that the government has not lived up to its fiduciary responsibility around payment of royalties in a variety of forms. I know it's difficult to summarize eight law cases.

[Douglas Rae]

Yes, you're quite correct. The problem is that this royalty calculation provided for under the present Indian Oil and Gas Act is very complicated. It's a function of volumes and price. There are a lot of issues in regard to this calculation.

You're quite right; the claims made in these various lawsuits are not new ones. They're not directed at the present government. As a matter of fact, most of them started under the former government. This is a long-standing issue.

We're not suggesting that it's necessarily an easy issue, but they have been going on a long time and they require a resolution. We simply think that this is the time, with some of the amendments that we're proposing, that a resolution of these outstanding royalty issues can be facilitated.

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

In terms of settling royalties, is there an interim step before they actually have to end up in litigation to solve this?

[Douglas Rae]

Well, this relates to the question that Mr. Russell asked, too, in terms of liability. The current reality is that if there is a dispute over royalties, everybody is thrown into the pot. The Stoney Nations and other first nations have been defendants in lawsuits for royalties allegedly overpaid by producers to Canada, and vice versa. So you have very complex litigation involving all three parties.