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

Marginal note:Transitional provision — continuation

• 71 (1) Sections 63 to 68 apply to the continuation of any subsurface lease that was granted under the Indian Act or the Act before these Regulations came into force.

• Marginal note:Transitional provision — non-productivity

  (2) Section 69 applies to a subsurface lease that was continued under the Indian Act or the Act before these Regulations came into force if the lands in the lease area cease to be eligible for continuation on the basis on which the lease was continued.

• Marginal note:Transitional provision — inadequate productivity

  (3) Section 70 does not apply if the lands that are subject to the bitumen recovery project are the subject of an authorization under section 42 of the Indian Oil and Gas Regulations, 1995.

Surface Rights or Interests

Marginal note:Authorization

• 72 (1) A person may carry out surface operations on First Nation lands for the purpose of exploiting oil and gas if

  • (a) in the case of operations that require crossing over or going through First Nation lands, they hold a right-of-way in those lands; and

  • (b) in the case of operations that require the exclusive occupation and use of the surface of First Nation lands, they hold a surface lease in respect of those lands.

• Marginal note:Right of entry

  (2) A person that intends to apply for a surface contract in respect of First Nation lands to carry out operations referred to in subsection (1) may, with the authorization of the council and any First Nation member in lawful possession of those lands, enter on the lands to determine the location of proposed facilities, conduct surveys and carry out any operation necessary to submit an application under section 75.

Marginal note:Preliminary negotiation

• 73 (1) Before applying for a surface contract, the applicant must provide the council, and any First Nation member in lawful possession of lands in the proposed contract area, with a survey sketch of that area and must reach an agreement with them on the following:

  • (a) the lands to be included in the contract area;

  • (b) the operations that will be carried out on those lands;

  • (c) the surface rates, if they have not already been fixed by the Minister in a related subsurface contract; and

  • (d) if a service well is to be drilled or an existing well is to be used as a service well, the permitted uses of the well and the amount of compensation to be paid in respect of the well.

• Marginal note:Surface rates — right-of-way

  (2) In the case of a right-of-way, the surface rates consist of

  • (a) a right-of-entry charge of $1,250 per hectare, subject to a minimum charge of $500 and a maximum charge of $5,000; and

  • (b) initial compensation based on the fair value of lands that are similar in size, character and use.

• Marginal note:Surface rates — surface lease

  (3) In the case of a surface lease, the surface rates consist of

  • (a) the right-of-entry charge referred to in paragraph (2)(a);

  • (b) initial compensation based on the fair value of lands that are similar in size, character and use, the loss of use of the lands, adverse effects and general disturbance; and

  • (c) the annual rent for subsequent years, based on the loss of use of the lands and adverse effects.

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.