Indian Oil and Gas Act (R.S.C., 1985, c. I-7)

Short Title

Marginal note:Short title

1 This Act may be cited as the Indian Oil and Gas Act.

Interpretation and Application

Marginal note:Definitions

• 2 (1) The following definitions apply in this Act.

  approval

  approval, in relation to the council of a first nation, means approval evidenced by a written resolution of the council or, if the council has delegated its authority to any individual or corporation, approval in writing signed by that individual or by an individual authorized to sign for that corporation. (approbation)

  condensate

  condensate means a liquid mixture, consisting mainly of pentanes and heavier hydrocarbons, that is condensed from natural gas and that can be recovered at a well. (condensat)

  contract

  contract means a licence, permit, lease or other instrument that confers a surface or subsurface right or interest in first nation lands, or an option to acquire such a permit or lease, that is granted under this Act for the purpose of oil or gas exploration or exploitation. (contrat)

  council

  council, in relation to a first nation, has the same meaning as the expression council of the band in the Indian Act. (conseil)

  exploitation

  exploitation, in relation to oil and gas, means the drilling or testing of a well or production, recovery or subsurface storage, and includes the injection of a substance into an oil or gas reservoir and the subsurface disposal of a substance, but does not include refining. (exploitation)

  exploration

  exploration means any operation to assess the geological conditions of the subsurface for the presence of oil or gas or any activity connected with such assessment, including the drilling of a test hole to a depth no greater than that prescribed by regulation. (exploration)

  first nation

  first nation means a band within the meaning of the Indian Act. (première nation)

  first nation lands

  first nation lands means

  • (a) reserve lands that have been surrendered, other than absolutely, under the Indian Act for a purpose that includes oil or gas exploration or exploitation;

  • (b) lands that have been absolutely surrendered under the Indian Act but not sold;

  • (c) subsurface rights and interests in lands that have been absolutely surrendered under the Indian Act and of which only the surface rights and interests have been sold; or

  • (d) rights and interests in reserve lands that have been granted to Her Majesty in right of Canada for oil or gas exploration or exploitation pursuant to a land code adopted under the Framework Agreement as defined in subsection 2(1) of the Framework Agreement on First Nation Land Management Act. (terres de la première nation)

  first nation member

  first nation member, in relation to a first nation, means a person whose name appears on the band list of the first nation or who is entitled to have their name appear on that list. (membre de la première nation)

  gas

  gas means natural gas — including natural gas from a coal bed — that can be recovered from a well or any component of it, including condensate and marketable gas. (gaz)

  inspector

  inspector means an inspector designated under section 8. (inspecteur)

  lawful possession

  lawful possession, in relation to first nation lands, means lawful possession within the meaning of subsection 20(1) or section 22 of the Indian Act. (possession légale)

  Minister

  Minister means the Minister of Indigenous Services. (ministre)

  oil

  oil means a mixture of hydrocarbons that can be recovered from a well in liquid form, with the exception of condensate. (pétrole)

  operator

  operator means a person who is engaged in exploration for or exploitation of oil or gas situated in first nation lands. (exploitant)

• Marginal note:Delegation by council

  (2) The council of a first nation may by written resolution delegate to any person any power of the council, or any right of the council to be consulted or notified, under this Act.

• Marginal note:Amounts owing

  (3) For the purposes of this Act,

  • (a) a reference to payment of a royalty means payment of an amount equal to the value of the royalty or, if required by or under the regulations, payment of the royalty in kind; and

  • (b) a reference to an amount owing includes the value of a royalty that is owing.

• Marginal note:Pooled oil or gas

  (4) A reference in this Act to oil or gas recovered from first nation lands includes oil or gas that is attributed to those lands under regulations made pursuant to paragraph 4.1(1)(s).

Marginal note:Instruments under other Acts

• 3 (1) Any licence, permit, lease or other instrument granted under any other Act of Parliament for the purpose of exploration for or exploitation of oil or gas situated in first nation lands — other than an instrument granted under the First Nations Oil and Gas and Moneys Management Act or an instrument granted to a person other than Her Majesty in right of Canada under the First Nations Land Management Act, as it read before the coming into force of the Framework Agreement on First Nation Land Management Act, or the Framework Agreement, as defined in subsection 2(1) of that Act — is subject to this Act as if the instrument were a contract.

• Marginal note:Excluded lands

  (2) The Governor in Council may, by regulation, exclude from the application of this Act any first nation lands that, in the Governor in Council’s opinion, contain crude bitumen that is capable of being recovered by mining.

Royalties

Marginal note:Royalties

• 4 (1) Despite the provisions of any contract but subject to subsection (2), whenever oil or gas is recovered from first nation lands, there is reserved to Her Majesty in right of Canada in trust for the first nation concerned a royalty consisting of the share of the oil or gas determined under the regulations, which the contract holder shall pay to Her Majesty in right of Canada in trust for the first nation in accordance with the regulations.

• Marginal note:Special agreements

  (2) The Minister may, with the approval of the council of a first nation, enter into a special agreement with any person, for any period and subject to any conditions set out in the agreement, for a reduction or increase in the royalty otherwise payable under subsection (1) or a variation in the method of determining that royalty.

Regulations

Marginal note:Regulations

• 4.1 (1) The Governor in Council may make regulations respecting exploration for and exploitation of oil or gas situated in first nation lands, including regulations

  • (a) respecting contracts and classes of contracts, including regulations in relation to

    • (i) the granting, amendment, renewal, assignment and consolidation of contracts,

    • (ii) the terms and conditions of contracts and the rights and obligations of contract holders, and

    • (iii) the determination of rents or other amounts payable in respect of contracts, including by means of arbitration;

  • (b) respecting the suspension and cancellation of contracts, and authorizing the Minister to suspend or cancel contracts in specified circumstances;

  • (c) respecting the surrender of rights and interests under contracts, subject to any conditions that the Minister may specify;

  • (d) respecting the conversion of contracts from one class to another or the continuation of contracts, subject to any conditions that the Minister may specify, and authorizing the Minister to convert or continue a contract when the Minister is satisfied that conditions specified by regulation have been met;

  • (e) respecting the determination of the quantity or quality of oil or gas recovered under a contract;

  • (f) respecting the determination of the value of oil or gas recovered under a contract, including its determination where oil or gas is the subject of a transaction between related parties and, for that purpose, defining “related parties”;

  • (g) respecting royalties on any class of oil or gas recovered from first nation lands, including regulations

    • (i) determining the share of oil or gas that constitutes a royalty and determining the value of that royalty,

    • (ii) prescribing the costs and allowances that may be taken into account in determining the royalty or the value of the royalty,

    • (iii) respecting the payment of royalties in cash or in kind, and authorizing the Minister to direct payment of a royalty in kind,

    • (iv) specifying the circumstances in which the payment of a royalty is waived on oil or gas that is consumed as fuel in drilling for, producing, recovering, treating or processing oil or gas,

    • (v) respecting the sale or other disposition of the share of oil or gas that constitutes a royalty, and

    • (vi) respecting the assessment by the Minister of royalties owing by a contract holder;

  • (h) respecting the payment of interest on amounts owing under this Act and establishing the rate of interest or the manner of determining it, including the application of compound interest;

  • (i) specifying the circumstances in which a compensatory royalty is payable and prescribing the amount of the royalty or the manner of determining it;

  • (j) respecting the order in which payments received in respect of a contract will be applied towards royalties, rents, interest, penalties or other amounts owing by the contract holder;

  • (k) respecting the security to be provided for the performance of obligations under this Act or a contract, including the amount of the security or the manner of determining the amount, and specifying the circumstances and manner in which it will be returned or realized;

  • (l) prescribing measures that contract holders may be required to take when the Minister determines that there is a risk of drainage of oil or gas by a well outside a contract area, whether the well is in or outside first nation lands;

  • (m) authorizing the Minister in specified circumstances to order the submission of plans for the exploitation of oil or gas situated in first nation lands, respecting the content of such plans and their approval by the Minister, requiring contract holders to comply with plans approved by the Minister and authorizing the Minister to order the modification of such plans;

  • (n) respecting surveys of first nation lands for the purposes of this Act and authorizing the Minister to require surveys to be carried out in prescribed circumstances;

  • (o) respecting the keeping, or the submission to the Minister or the council of a first nation, of documents and information related to the administration of this Act or the regulations by contract holders, operators, persons whose rights have been combined with those of a contract holder pursuant to regulations made under paragraph (s) or persons who have acquired oil or gas recovered from first nation lands or a right to such oil or gas, and authorizing the Minister on application to vary the location at which any such documents or information are to be kept;

  • (p) respecting audits and examinations of documents and information referred to in paragraph (o) by first nations pursuant to agreements with the Minister, for the purpose of verifying the royalties payable on oil or gas recovered from first nation lands;

  • (q) respecting inspections, by persons authorized by a written resolution of a first nation council, of facilities and operations on first nation lands that are related to exploration for or exploitation of oil or gas, in order to monitor compliance with this Act and the regulations;

  • (r) respecting the confidentiality of and access to information obtained under this Act;

  • (s) respecting the combining, with the approval of the Minister, of rights to oil or gas under a contract with rights to oil or gas under another contract, or with rights to oil or gas situated outside first nation lands, for the purpose of the joint exploitation of oil or gas, the prevention of waste or the sharing of oil or gas;

  • (t) respecting the abandonment of oil and gas wells or their conversion to uses incidental to the exploitation of oil or gas, and authorizing the Minister to approve such abandonments or conversions;

  • (u) establishing fees payable by individuals, corporations, partnerships or trusts in relation to contracts or for services provided in the administration of this Act;

  • (v) requiring, to the extent that it is practicable and reasonably efficient, safe and economical to do so, an operator to employ persons who are resident on reserves that include first nation lands on which the exploration or exploitation is being conducted;

  • (w) specifying powers of the Minister that may only be exercised following notice or a hearing and prescribing the manner of giving notice, the content of notices and the procedure governing hearings;

  • (x) respecting the protection of the environment from the effects of exploration for or exploitation of oil or gas situated in first nation lands, respecting environmental audits and authorizing the Minister to require such audits to be carried out in specified circumstances at the expense of contract holders;

  • (y) respecting the conservation and equitable production of oil or gas situated in first nation lands; and

  • (z) generally for carrying out the purposes of this Act.

• Marginal note:Provincial variations

  (2) Regulations made under subsection (1) may vary from province to province.