Indian Oil and Gas Regulations (SOR/2019-196)

Marginal note:Negotiation breakdown

74 If an agreement cannot be reached on the amount of the initial compensation or annual rent to be paid, the Minister must, at the request of the applicant, the council or a First Nation member in lawful possession of lands in the contract area, determine the amount in accordance with subsection 73(2) or (3).

Marginal note:Application for surface contract

• 75 (1) The application for a surface contract must be submitted to the Minister in the prescribed form and include

  • (a) the terms and conditions negotiated with the council and any First Nation member in lawful possession of lands in the contract area;

  • (b) a survey plan of the lands to be included in the contract area;

  • (c) the results of an environmental review of the operations to be carried out in the contract area that has been conducted by a qualified environmental professional who deals with the applicant at arm’s length; and

  • (d) the surface lease or right-of-way application fee set out in Schedule 1.

• Marginal note:Environmental review

  (2) The results of the environmental review must be submitted in the prescribed form and include

  • (a) a site evaluation that is based on the site’s topography, soils, vegetation, wildlife, sources of water, existing structures, archeological and cultural resources, traditional ecological knowledge, current land uses and any other feature of the site that could be affected by the proposed uses of the lands in the contract area;

  • (b) a description of the operations to be carried out on the lands, the duration of each and its location on the site;

  • (c) a description of the short-term and long-term effects that each operation could have on the environment of the site and on any surrounding areas;

  • (d) a description of the proposed mitigation measures, the potential residual effects after mitigation and the significance of those effects; and

  • (e) a description of the consultations undertaken with the council and the First Nation members.

• Marginal note:Environmental protection measures

  (3) If the application meets the requirements of subsection (1) and the proposed operations can be carried out without causing irremediable damage to the First Nation lands, the Minister must send the applicant and the First Nation a copy of the contract that includes

  • (a) the terms and conditions negotiated with the council and any First Nation member in lawful possession of lands in the contract area; and

  • (b) the environmental protection measures that must be implemented to permit the holder to carry out operations under the contract.

• Marginal note:Granting of contract

  (4) The Minister must grant the contract if he or she receives the following:

  • (a) four original copies of the contract, signed by the applicant;

  • (b) a written resolution of the council approving the contract and the written consent of any First Nation member in lawful possession of lands in the contract area; and

  • (c) the right-of-entry charge and initial compensation owed under the contract.

• Marginal note:Compliance with measures

  (5) The holder must ensure that all environmental protection measures included in the contract are implemented and complied with.

Marginal note:Term

76 A surface contract ends on the day on which its surrender has been approved by the Minister, unless the contract provides otherwise.

Marginal note:Renegotiation of rent

• 77 (1) Unless a surface lease provides otherwise, the holder must renegotiate the amount of the rent with the Minister, the council and any First Nation member in lawful possession of lands in the lease area at the end of the shorter of

  • (a) every five-year period, and

  • (b) any period fixed by the laws of the relevant province for the renegotiation of surface leases in lands that are not First Nation lands.

• Marginal note:Amendment of lease

  (2) The Minister must amend the lease to reflect the rent renegotiated under subsection (1) if

  • (a) a written resolution of the council approving the renegotiated rent is submitted along with the written consent of any First Nation member in lawful possession of lands in the lease area; and

  • (b) the Minister determines that the renegotiated rent is fair on the basis of the criteria referred to in paragraph 73(3)(c).

• Marginal note:Renegotiation breakdown

  (3) If an agreement cannot be reached in renegotiating the rent, the Minister must, at the request of the holder, the council or any First Nation member in lawful possession of lands in the lease area, determine the rent on the basis of the criteria referred to in paragraph 73(3)(c) and amend the lease accordingly.

Marginal note:Abandonment, remediation and reclamation

78 If the lands in a surface contract area are no longer used for the uses for which the contract was granted, the holder must abandon any well and facilities in the area and remediate and reclaim those lands.

Royalties

Marginal note:Payment of royalty

• 79 (1) Except as otherwise provided in a special agreement entered into under subsection 4(2) of the Act, a subsurface contract holder must pay a royalty, in an amount calculated in accordance with Schedule 5, on the oil and gas recovered from, or attributed to, lands in the subsurface contract area.

• Marginal note:Index price or actual selling price

  (2) If a special agreement entered into under subsection 4(2) of the Act provides that the royalty on oil or gas is to be calculated using a monthly index price or corporate pool price rather than the actual selling price, the holder must, in the prescribed form, provide the Minister with the index price or corporate pool price for each month in which the oil or gas is produced.

Marginal note:Deadline for payment

80 The royalty must be paid on or before the 25th day of the third month after the month in which the oil or gas is produced.

Marginal note:Royalty — every sale

• 81 (1) Subject to subsection (2), every sale of oil or gas that is recovered from, or attributed to, lands in a subsurface contract area must include the sale, on behalf of Her Majesty in right of Canada, of any oil or gas that constitutes the royalty payable under the Act.

• Marginal note:Payment in kind

  (2) After giving the contract holder notice, and having regard to any obligations that the holder may have in respect of the sale of oil or gas, the Minister may, with the prior approval of the council, direct the holder to pay all or part of the royalty in kind for a specified period or until the Minister directs otherwise.

Marginal note:Keeping of information

• 82 (1) Any person that produces, sells, acquires or stores oil or gas that has been recovered from First Nation lands, or acquires a right to such oil or gas, must keep, for a period of 10 years, all information that may be used to calculate the royalty owing in respect of that oil and gas, including any information required by this section.

• Marginal note:Information — royalties

  (2) Any person referred to in subsection (1) must submit the following information to the Minister in the prescribed form as soon as it becomes available:

  • (a) the volume and quality of the oil or gas produced, sold, acquired or stored, or to which a right was acquired, by that person during the month in which the oil or gas was produced;

  • (b) the value for which the oil or gas, or a right to the oil or gas, was sold or acquired;

  • (c) any costs and allowances to be taken into account in determining the royalty payable on the oil or gas; and

  • (d) any other information that is required to calculate or verify the royalty payable.

• Marginal note:Information — related parties

  (3) The Minister may require a person referred to in subsection (1) to submit information for the purpose of determining whether the parties to a transaction are related parties.

• Marginal note:Related parties

  (4) For the purpose of subsection (3), persons are related parties if they are related persons, affiliated persons or associated corporations within the meaning of subsection 251(2), section 251.1 and subsection 256(1), respectively, of the Income Tax Act.

Marginal note:Order to submit plan or diagram

• 83 (1) For the purpose of verifying the royalty payable under a contract, the Minister may order an operator to submit a plan or diagram, drawn to a specified scale, of any facility that is used by the operator in exploiting oil or gas.

• Marginal note:Deadline

  (2) An operator that receives an order must submit the requested plan or diagram within 30 days after the day on which the order is received.

Marginal note:Notice to submit documents

• 84 (1) For the purpose of verifying the royalty payable under a contract, the Minister may send a notice requiring any person that has sold, purchased or swapped oil or gas recovered from First Nation lands to provide any of the following documents:

  • (a) a signed copy of any written sales contract or, if the contract was unwritten, a document that sets out its terms and conditions;

  • (b) a transaction statement, invoice or other document that sets out the details of the transaction;

  • (c) any agreement between persons respecting the costs and allowances to be taken into account in determining the royalty payable on the oil or gas.

• Marginal note:Deadline

  (2) A person that receives a notice sent under subsection (1) must submit the requested documents within 14 days after the day on which the notice is received.

First Nation Audits and Examinations

General Rules

Marginal note:Agreement required

• 85 (1) A First Nation may conduct an audit or examination for the purpose of verifying the royalties payable on oil or gas recovered from its lands if

  • (a) its council has entered into an audit or examination agreement with the Minister; and

  • (b) the audit or examination is conducted in accordance with the agreement and these Regulations.

• Marginal note:Procedure to obtain agreement

  (2) A council that has obtained preliminary approval of an audit or examination under section 89 may request that the Minister enter into an audit or examination agreement under section 90.

Marginal note:Qualifications

• 86 (1) A person who conducts an audit or examination under the Act must have the credentials and experience required to carry out their role in the audit or examination in accordance with generally accepted auditing standards.

• Marginal note:Requirements

  (2) A person who conducts an audit or examination under the Act, or accompanies an auditor or examiner,

  • (a) must not be employed by, be affiliated with or represent the oil or gas company that is the subject of the audit or examination;

  • (b) must have the certifications and comply with the occupational health and safety requirements required or imposed by the contract holder or by law; and

  • (c) must keep confidential any documents or information they obtain in connection with the audit or examination and must comply with the security requirements imposed by the contract holder or by law.

Marginal note:Confidentiality — First Nation

• 87 (1) A First Nation that conducts an audit or examination must keep confidential any documents or information it obtains in connection with the audit or examination and must comply with the security requirements imposed by the contract holder or by law.

• Marginal note:Exception

  (2) Despite subsection (1), the council must provide the Minister with a copy of all audit or examination reports and working papers within 30 days after the day on which the audit or examination is completed.

Preliminary Approval

Marginal note:Application for preliminary approval

88 To obtain preliminary approval of an audit or examination, a council must apply to the Minister in the prescribed form. The application must include

• (a) the name of the person whose documents and information are to be audited or examined;

• (b) the name and location of each facility in which the audit or examination will be conducted and the name of the facility’s operator;

• (c) the type of audit or examination to be conducted;

• (d) the period to be covered by the audit or examination;

• (e) the anticipated dates for starting and completing the audit or examination;

• (f) the reasons that the council believes that the audit or examination is necessary; and

• (g) a statement indicating whether the council is prepared to cover the costs of the audit or examination.

Marginal note:Decision

• 89 (1) The Minister must give preliminary approval if the requirements of section 88 are met, except in the following circumstances:

  • (a) the reasons provided by the council for conducting the audit or examination do not establish the existence of a risk that warrants an audit or examination;

  • (b) within the three years before the date of the application, the requested type of audit or examination has been conducted under the Act in respect of the same contract for the same period and the holder was found to be in compliance with the contract, these Regulations and the Act;

  • (c) the audit or examination is not on the Minister’s list of priority audits or examinations and the council is not prepared to cover its costs; or

  • (d) the Minister and the council do not agree on the type of audit or examination to be conducted, the period to be covered or the dates for starting and completion.

• Marginal note:Notice of decision

  (2) The Minister must send the council notice of his or her decision and, if preliminary approval is refused, the reasons for the refusal.

Request for Agreement

Marginal note:Request for agreement

90 A council’s request for an audit or examination agreement must be made to the Minister in the prescribed form within 180 days after the day on which the notice of preliminary approval is received and must include

• (a) the name of the proposed auditor or examiner;

• (b) a detailed audit or examination plan;

• (c) the dates for starting and completing the audit or examination;

• (d) the name of any person who will accompany the proposed auditor or examiner and a description of their role in the audit or examination; and

• (e) evidence that the proposed auditor or examiner has the credentials and experience referred to in subsection 86(1).

Marginal note:Refusal

91 The Minister may refuse the request only if

• (a) the information required by section 90 has not been provided;

• (b) a requirement referred to in section 86 has not been complied with; or

• (c) one or more circumstances that justified the preliminary approval of the audit or examination have changed.