Mr. Speaker, I am proud to have the pleasure of introducing Bill C-5, An Act to amend the Indian Oil and Gas Act.
In the recent Speech from the Throne, the government committed to take steps to ensure that aboriginal Canadians fully share in economic development opportunities and this legislation is a concrete example of that commitment.
The oil and gas sector provides a real source of promising economic development opportunities for first nations. Few other countries in the world can lay claim to the secure, abundant and diverse energy resources we enjoy in Canada. This energy wealth has fueled tremendous economic growth in many regions of the country.
The world's need for Canada's oil and gas holds significant promise for development for many years to come.
Since the government was formed, we have made clear our determination to ensure first nations share equally in our country's prosperity and that they are able to build stronger and self-reliant communities that can manage their own affairs.
Bill C-5 would help to advance these goals by enhancing Canada's capacity to assist first nations in managing their own affairs. The management and administration of oil and gas resources is governed on reserve lands by the Indian Oil and Gas Act and it is administered by Indian Oil and Gas Canada, a special operating agency within Indian and Northern Affairs Canada.
The mandate of Indian Oil and Gas Canada is to assist in fulfilling the Crown's fiduciary and statutory obligations related to the management of oil and gas resources on reserve lands and to ensure first nations initiatives for greater control over the management of their resources. In practical terms, this means that the agency issues and administers agreements on first nations lands, monitors oil and gas production and collects royalties for the benefit of first nations.
I will now speak to why the existing act needs to be amended.
The legislation under which Indian Oil and Gas Canada operates has not kept up with the times. The act first came into force back in 1974 when the industry was in the midst of a global energy crisis. Since then, most provinces have overhauled their laws and updated their regulations numerous times. For example, Alberta's legislation, the Alberta mines and minerals act, which governs resource development, has been amended more than 15 times since the 1970s. In contrast, the Indian Oil and Gas Act has remained unchanged for the past 34 years. We need to change that.
Furthermore, oil and gas exploration and exploitation on reserve lands and the revenue that these activities generate are significant. Over $1 billion in revenues from on reserve oil and gas activity have been collected on behalf of about 60 first nations over the past five years alone. This revenue is credited to those communities in its entirety. The industry is continuing to invest millions of dollars in exploration and exploitation activities on first nations reserve lands, more than $300 million in the past five years for drilling alone.
I realize that these amendments are very technical in nature but they are important. The broad changes brought forth can be grouped under three themes: first, amendments that would bring clarity to the oil and gas regulatory process; second, amendments that would ensure and strengthen accountability of Indian Oil and Gas Canada; and finally, amendments that would enhance the protection of first nations environmental, cultural and natural resources.
In terms of bringing clarity, once adopted, the amendments would ensure that the role and powers of the minister and reference to the courts are clear and provide for broader regulation-making authority. They will, equally important, allow federal regulations governing oil and gas projects to be harmonized with provincial oil and gas regulatory regimes. Co-operation with provincial authorities is key.
I want to make it clear that Bill C-5 would not increase the jurisdiction of provinces. It would allow for federal regulations to be made that are consistent with provincial laws, which is important to create clarity and certainty for both first nations and industry.
Enforcement powers would be clarified, as well as modernized. The current act limits fines to $5,000. This would be increased to $100,000 per day and sometimes more could be imposed by the courts.
In areas of high risk, such as the seizure of records and equipment, this would all be governed by relevant Criminal Code provisions and overseen by provincial courts. These amendments would ensure that the government, through Indian Oil and Gas Canada, can provide certainty and consistency for first nations, for industry and for provincial stakeholders.
The amendments that strengthen accountability to act on behalf of first nations by Indian Oil and Gas Canada are examples such as clear audit powers for Indian Oil and Gas Canada and accurate reporting and paying of royalties due to first nations when companies operate on reserve lands.
As another example, rules would be put in place to address complex relationships, not only between unrelated corporations but also between an existing corporation and its subsidiaries.
Bill C-5 would authorize new regulations to prevent companies from using non-arm's length transactions to unjustifiably reduce the royalty which would otherwise be payable to first nations. A company would not be able to sell oil or gas at a reduced price to a company it already owns in order to pay less royalty.
Furthermore, the limitation period to commence legal proceedings would be extended to 10 years and there is no limitation period in cases of fraud or misrepresentation.
The final set of amendments deal with enhancing protection for first nations' environment, cultural and natural resources. These amendments would balance the development of oil and gas resources with environmental protection. This is of interest to all Canadians. The current act has limited remedies in the case of non-compliance. Under the amendments, provincial environmental laws can be incorporated by reference into the federal regulations that apply to first nations reserve lands.
It is very important, of course, that anyone doing work on a reserve respect first nations' cultural and spiritual values and their special relationship to the land. Bill C-5 would authorize the minister to suspend operations of a company if areas involving these special values are at risk.
There are some further concerns from first nations. They wish to have a remedy when companies trespass on their property. With this legislation, there would be specific offences so that Indian Oil and Gas Canada would have more options to deal with these breaches.
A key policy objective for the government is ensuring our legislative framework supports first nations. The current Indian Oil and Gas Act falls short in this area. Many first nations are concerned that they will not be fully benefiting from the increase of exploration and development taking place around them. The Indian oil and gas industry is equally frustrated.
The reason behind these changes is to provide consistency and certainty to the oil and gas regime. That is one side of the equation. For the affected first nations, the revenue generated by this activity translates into increased economic development, new jobs and improved living standards.
The money being raised is used by first nations for training, housing, water and sewer projects, building stronger communities and a brighter future for their children. This modern suite of tools will better enable first nations to seize opportunities.
The amendments, as I mentioned, are very technical in nature. The first nations have been asking for these changes, and Canada started the process to modernize the act in 1999.
The Indian Resource Council is a national aboriginal organization advocating on behalf of 130 first nations with oil and gas production or the potential for production. We had extensive consultations with first nations and with oil and gas interests. First nations have validated the principles embodied in the legislation and have made suggestions for improvements.
Most noteworthy was the need to amend and modernize the legislation, and this need was endorsed by the Indian Resource Council at annual meetings in 2006 and 2007. Thanks to this close working relationship, oil- and gas-producing first nations have had the opportunity to influence the development of the amendments and will be called upon again to participate in the development of the regulations that will flow.
This support is reassuring, but the council went even further in order to make sure all communities with oil and gas interests had the opportunity to become fully aware. It held a symposium earlier this year in Alberta. Over 100 members representing more than 60 first nations attended. Their involvement and support were encouraging, and we are on the right track. We will continue to work in partnership, and this will lead to greater first nation control and management of petroleum resources on their lands.
The key to unleashing this potential lies in modernizing the legislative framework. Strong regulatory regimes are essential for both economic and social development. That is why we are bringing the Indian Oil and Gas Act up to 21st century standards.