Perhaps I will start by introducing the officials with me today. Sara Filbee is the assistant deputy minister of lands and economic development at Indian and Northern Affairs Canada. Strater Crowfoot is the chief executive officer and executive director of Indian Oil and Gas Canada. Karl Jacques is senior counsel with the Department of Justice.
They'll be here to answer all the difficult questions. I've promised them that I'm prepared to hand off anything that gets too technical to them, so they're ready for that, and they're ready, of course, to answer any questions you may have.
Thank you, Mr. Chairman and committee, for inviting me here today to outline both the necessity and the many benefits of Bill C-5, legislation that is needed so that first nations oil and gas resources will be managed using the most modern and effective tools available. This will ensure that first nations have the efficient regulations necessary to fully capitalize on the economic development opportunities created by oil and gas industries on their territory.
As committee members know, Bill C-5 has been a long time coming. As the 130 first nations with petroleum production or the potential for production on their lands will tell you, it's long overdue. The Indian Oil and Gas Act came into force back in 1974, so it's been around a long time. To say that things have changed since then is an understatement. The world has changed since then and the oil and gas industry has changed. There's a new generation of workers. There are new ways of working and better ways to protect the environment while increasing profitability. A lot of things have changed since that act was first written back in the 1970s.
Provincial laws and regulations governing the sector have kept pace with these changes in the intervening years, but federal legislation remains seriously out of date, and that's a real problem for first nations. Even though provincial governments have no jurisdiction over first nations for either oil or gas development or leasing of oil and gas rights on reserve lands, they do have authority over oil and gas companies operating on these lands. Federal laws governing oil and gas projects on reserve lands need to be better harmonized with provincial oil and gas regulatory regimes.
Cooperation with provincial authorities is essential. So, too, is the need to bring this outdated Indian Oil and Gas Act into the 21st century.
Bill C-5 responds to the needs of first nations and the oil and gas industry alike. It will do the following.
It will modernize and clarify the oil and gas regulatory process. For example, it will clarify ministerial and judicial review powers.
It will increase certainty and strengthen the accountability of Indian Oil and Gas Canada, which acts on behalf of first nations, such as providing Indian Oil and Gas Canada with new powers to audit operators.
It will also enhance protection for first nations environmental, cultural, and natural resources. For instance, as minister, I will have the authority to suspend operations that damage or threaten the environment or first nations sites of cultural, ceremonial, or spiritual significance.
I am confident that this is the right legislation, right for the times, because it is the result of extensive consultations and cooperation with the key players with a stake in this issue. And because it responds to what First Nations have been telling us needs to be done.
Over the past decade, Indian Oil and Gas Canada, working in partnership with the Indian Resource Council, a first nations organization advocating on behalf of some 130 oil and gas producing first nations, or potentially producing first nations, has held sessions with most of those oil and gas producing first nations and numerous tribal councils. And thanks to the longstanding and mutual relationship between Indian Oil and Gas Canada and the Indian Resource Council, first nations played an active role in the development of Bill C-5. Many of their suggestions for improvements have been incorporated in the bill before us.
We also worked with the Indian Resource Council and the Federation of Saskatchewan Indian Nations on the National Energy Business Centre of Excellence. This centre provides first nations with oil and gas expertise, things like legal advice, oil and gas business advice, and operations advice. It also helps them in identifying and coordinating programs, such as training and information sharing for first nations oil and gas managers. This will assist first nations in moving from being passive recipients of royalties to being actively involved in the business side of oil and gas, something I know there's increasing interest in. This will generate opportunities for wealth creation, and it could increase the number of oil and gas permits and leases held by first-nations-owned oil and gas companies, which currently are at approximately 40%.
I want to reiterate that first nations have told us time and time again that capacity development is very important to them. Many first nations are not ready to take advantage of the First Nations Oil and Gas and Moneys Management Act, the legislation that came into force in 2006, which enables development-ready first nations to assume full control of their oil and gas resources and moneys.
My department recognizes that the First Nations Oil and Gas and Monies Management Act may not be the right fit for every First Nation—First Nations may not yet have the necessary experience and capacity to take that major step. But this is an option for those who wish to take advantage of it.
Bill C-5 will ensure that Indian Oil and Gas Canada becomes, and continues to be, a modern regulator for those first nations whose oil and gas resources will continue to be managed under the Indian Oil and Gas Act. I also want to point out that this bill is not the end but merely a continuation of an ongoing consultation process with first nations. We will continue to work in partnership with the Indian Resource Council on the development of the regulations, and to develop mechanisms to deal with issues of concern to first nations.
Now, Mr. Chairman, there are a few other critical features of this legislation that I would like to briefly note before I take members' questions. During second reading debate, we heard the recurring themes of first nations consultation, economic development, and the environment. I have already touched upon the first two a little bit, but just to continue, one important issue addressed by Bill C-5 is providing assurance that the environment on first nations land will be protected, not only for today's generations but also for the generations that will follow. Bill C-5 provides for the authority to replicate appropriate provincial legislation and regulations. Harmonizing the environmental regime governing oil and gas activities on reserve with that of the same activities off reserve within a particular province is a good example of replicating a provincial regime into federal law to protect the environment.
Through this act, it will become possible to continually update environmental protection regulation without further regulation. In cases where there is a violation, as minister, I will have the authority to suspend a company's operations if those are damaging to the environment, or if areas of cultural, ceremonial, or spiritual importance are at risk. As well, the bill will give me the authority to impose hefty penalties for trespassing on first nations land, or the failure to submit forms, reports, or other required information. For more serious offences, the bill establishes a process to directly access the courts, and further establishes significant fines, which can be levied per day.
First nations are also protected in cases of non-compliance. For example, the bill provides for compensation to be paid to a first nation for loss of oil and gas, or reduction in the value of their lands resulting from trespassing.
Bill C-5 will give the Indian Oil and Gas Act real teeth, unlike the outdated version in place today.
I think it is very important that Bill C-5 will allow federal regulations to incorporate provincial laws as they relate to environmental protection, exploration, and equitable production or conservation. I want to clarify, however, that Bill C-5 does not give over any jurisdictional authority whatsoever to the provinces, nor will Bill C-5 have any impact whatsoever on the crown's fiduciary responsibilities, or on aboriginal or treaty rights. In fact, the proposed changes will strengthen Indian Oil and Gas Canada's legislative and regulatory capacity. This will actually increase its ability to fulfill the crown's fiduciary and statutory obligations related to the management of oil and gas resources on first nations lands.
Mr. Chairman, the fact that First Nations have been asking for these changes reinforces just how necessary they are. This is maybe the strongest argument for speedy passage of this legislation.
Mr. Chairman, the fact that first nations have been asking for these changes reinforces just how necessary they are. This is maybe the strongest argument for speedy passage of this legislation. The more than 130 oil and gas producing, or potentially producing, first nations across the country have waited long enough. It's time to act. I know I can count on this committee's support to move this legislation forward as quickly as possible.
I'd be pleased to respond to questions from committee members, and I look forward to hearing the results of your deliberations over the days to come.
Good morning, and thank you, Mr. Chair.
Good morning, Minister, Ms. Filbee, Mr. Jacques, and Mr. Crowfoot. It's good to have you with us.
I want to go back to the IRC's mandate and to ask the minister if he agrees with this particular provision in their mandate:
||To support First Nations in their efforts to attain greater management and control of their oil and natural gas resources.
I believe that's something we all probably agree with conceptually or in principle. If you're in agreement with that particular statement, how does Bill C-5 move us in that particular direction?
I ask this because I don't see many powers vested with the first nation in this particular bill; they're all vested with the minister or the governor-in-council to make certain regulations respecting oil and gas on reserves. How does that complement or play into the First Nations Oil and Gas and Moneys Management Act?
I would also like to know how many first nations have opted into the latter, that is, the First Nations Oil and Gas and Moneys Management Act? How many are effectively under that particular piece of legislation, and how many remain under the auspices of the forerunner of this particular bill, Bill C-5, which will probably now become new law?
So I'd just like to have a sense of that.
Those are good questions, I think, and I'm sure you'll ask similar questions of some of the first nations that are covered under this act during their testimony.
I have a couple of things to say.
One is that a strong regulatory regime that can keep pace with provincial regulations, I believe, allows maximum benefits for the first nations. For example, the Alberta oil and gas regulations have been changed dozens and dozens of times since our bill has been brought in. Everything from environmental protection to how drilling is done, how cleanup takes place, and how royalties are paid, all of that stuff, is regularly updated to reflect modern reality, but that hasn't been the case here.
You may hear some horror stories of what has gone on, where companies have come in and offered to do slap-dash drilling operations such that, “If you get me in here, I can do something for you.” It has not been good for the environment, it's not been good for the first nations, because it's not been done properly or under sufficient regulatory oversight, and first nations haven't benefited to the maximum they should from the royalties due them.
The second thing is that, moving forward, I've promised in my exchange of letters with the Indian Resource Council that on any regulations we develop, I'll work hand in glove with them. There is further regulatory work to be done, and one of the assurances I want to give—and this is important for first nations—is that the hand-in-glove relationship will be developed and be ongoing. So on the regulations that will benefit first nations oil and gas, or potential oil and gas revenues and production on their lands, we'll work closely with those first nations to make sure we cover the bases. So if they identify gaps, or if there's specific language we need to use, we're prepared to do that while working with them.
To respond to Mr. Russell's questions, the bill itself does not directly help first nations in gaining more control. It helps us better manage the resources on their behalf.
Our process is a two-key process. We work with chiefs and councils in approving deals. We both have to approve them to have them go forward. For us, then, this really clarifies the rules we operate under. It enhances our tools. It helps first nations to better jointly manage the resource.
With respect to the First Nations Oil and Gas and Moneys Management Act, or FNOGMMA, that bill is intended for first nations to take direct control of those resources. FNOGMMA was passed in 2006.
Currently we're working with three first nations. This year we're hoping to have them move to a vote. These are the Alberta first nations Blackfoot, or Siksika, and Blood, and White Bear in Saskatchewan. These first nations are moving along to gain full control of their oil and gas resources. They'll be having a vote before September 30 to ask their membership if they would like that to go ahead, and that the first nation gains full control.
We are currently working with two other first nations looking at FNOGMMA. The act has two parts--the oil and gas operations and the moneys management. You can opt in to just moneys management. We have currently two first nations looking at the moneys management side.
This is part of the puzzle. There's never a piece of legislation or any one ministry that can say it covers all the bases.
I do think there is great opportunity right now. I mentioned Saskatchewan, but it covers wherever oil and gas may be found and where first nations have said they want to exploit those resources, they think it's a good opportunity, and it gives them a revenue stream of own-source revenue that wouldn't have been there. Of course, once that happens then a lot of other things become possible. Other business opportunities flow from that and can be funded with it.
But I think the rest of the package comes from things like we announced in Budget 2009, where we've put in $200 million, for example, on skills and training for aboriginal people. We're prepared to move very aggressively in order to make sure that first nations and aboriginal people take full advantage of any business opportunities that are out there. We signed, for example, everything from the AHRDA-type programming, which is on more typical skills and training development on a case-by-case basis, to some of the ASEP programming, which involves big multilateral arrangements with provinces and big corporations about how we can train aboriginal people to take part in this industry. We've had some good successes right across the country where people are able to take advantage of that. With the training and the skills development, people are more comfortable to participate in whatever industry. You mentioned forestry, but certainly oil and gas will be the same thing. The centres of excellence are also going to help.
I think it's important that first nations go forward with confidence and don't feel that they're going through in a knowledge vacuum. They need to know that the advice they're getting is sound and based on the experience of others in like situations. I think with that combination, business loves certainty, and aboriginal business is the same way.
[Witness speaks in Dene
Thank you, Mr. Chairman.
I'll make a few introductory remarks on behalf of our chairman, Errnol Gray, and then we'll turn the presentation over to Mr. Roy Fox, president of the IRC. I would like to start off by introducing our delegation, which is representing the Indian Resource Council: Roy Fox, president and CEO; Delbert Wapass, vice-chief of the Federation of Saskatchewan Indian Nations; Joe Dion, who was the founder and original president and chairman of the IRC; and George Stanley, who is the chief of the Frog Lake First Nation in northeastern Alberta.
Mr. Chairman, members of the committee, thank you for the opportunity to be here today as you study Bill C-5.
The IRC has been an active participant in the development of this legislation. We have a vested interest in the passage of this bill, and we hope we can assist you in doing so quickly. We recognize that this federal legislation is strongly needed to enable efficient and effective regulation of industry activity on our lands.
The Indian Resource Council advocates on behalf of its membership for changes to federal policy that will improve and increase economic development opportunities in the oil and gas sector for the first nations and their membership.
We provided information about a proposed amendment to our membership and garnered their input to the extent possible.
The IRC has worked with Canada to develop a long-term approach to the reform of the Indian Oil and Gas Act. We have a steering committee to manage this process and two joint technical committees in place to work on the specifics.
The work of joint technical committee 1 is reflected in this legislation. This committee has started to develop a regulatory regime that this regulation will authorize. Many of the issues and concerns that have been raised by our members will be addressed through this regulatory process.
Joint technical committee 2 focuses on what we call the continuous change process. This committee has responsibility for discussing issues that have not been fully addressed in this bill. These include future Indian Oil and Gas Act modernization changes, issues related to the first nations management and control of their oil and gas resources, and economic and business development.
We are here today, Mr. Chair, to formally express our support for this initiative, to speak to you about our agenda for continuous change in the management of oil and gas on Indian lands, and, most important, to answer your questions about C-5 and our involvement in this initiative. The Indian Resource Council has participated in this process under the leadership of our president, Mr. Roy Fox. At this point, I would like to turn our presentation over to Mr. Fox.
[Witness speaks in Blackfoot
Thank you, Chief Ahnassay.
And thank you, Chair and the committee, for giving us the opportunity to appear before you today.
I would like to share with you the perspective that the IRC, the Indian Resource Council, has always had with respect to oil and natural gas development and the work we do.
Our role has been to ensure that our member first nations get the best possible return on their oil and natural gas resources. We have tried many ways of meeting that important objective over the years. Initially, it was to ensure that the royalties we received were fair and equitable. However, it has gone a little further over the years as we have come to realize the level of involvement that we can have on the business side of the oil and gas sector and pertaining to development of our lands.
Enhancing that involvement has become a key objective of our organization. In talking of greater control of our oil and natural gas resources, we are also talking about the ability to really participate in the business side of our industry for the benefit of all first nations and their members.
Mr. Chair, the Indian Oil and Gas Act provides the framework for the management and stewardship of oil and natural gas development on our lands. The Indian Resource Council has been working since 1999, in partnership with Indian Oil and Gas Canada and the Department of Indian Affairs, on the modernization of the Indian Oil and Gas Act. The purpose of these amendments is to provide Indian Oil and Gas Canada—our resource manager, our regulator, our fiduciary—with a more modern toolkit with which to perform these important roles. We believe that the amendments contained in this legislation will provide Indian Oil and Gas Canada with the authorities required to enforce industry compliance on behalf of first nations.
Chief Ahnassay spoke earlier of the work that our technical committees have been doing in support of this process. I would like to expand somewhat on the work of joint technical committee 1.
Joint technical committee 1 is made up of representatives of both Canada and our member first nations, representing most of the major oil and gas producing first nations, who obviously have a vested interest in the proposed amendments to this act. We have had regular and consistent participation and input from first nations since this process began in earnest in 2002.
These representatives have been drawn from the Four Nations of Hobbema, the Tribal Chiefs of Alberta, the Dene Tha', the Blood Tribe, the Siksika, the Stoney tribes, and of course the Federation of Saskatchewan Indian Nations.
Since this process was re-engaged in the summer of 2006, this group has been involved in the most detailed aspects of developing a framework for the bill that we could all agree upon, negotiating the drafting instructions for use by Canada in the preparation of this bill, and reviewing the final legislation prior to its introduction in the last Parliament as Bill C-63. This group was also tasked with the responsibility of keeping their first nations and leaders apprised of this work and bringing feedback to the joint committee.
This was a truly cooperative process in which we agreed on what would be included in this package and what would be put off to a later date. We did not get all of what we wanted here, nor did Canada. What we did get was an agreement on some fundamental changes to our governing act that would benefit our first nations.
We also agreed on a continuous change process and a regulatory amendment process that will address additional and valid concerns that are raised by first nations. This work has already commenced, and the estimated time is that it will take between 18 and 24 months to complete.
In addition to working with Indian Oil and Gas Canada and the Department of Indian Affairs headquarters on this initiative, we have worked hard to keep our members informed and involved in the discussions. Obviously the participation of affected first nations is very important to the acceptance and validation of any new initiatives. While the bulk of our members is located in Alberta and Saskatchewan, we have also travelled to meet with interested parties in British Columbia, Ontario, and the Atlantic provinces. In addition, we have hosted two detailed symposiums for our members, where all aspects of this package have been presented and discussed at length. We also responded to individual requests by first nations to provide additional information, which we have done and will continue to do as the regulatory process starts.
Finally, the membership of the Indian Resource Council has reviewed the progress—
Thank you for giving up some of your time, sir.
I think it is important to note that the development of this bill, the amendment of this bill, is to us only part of a total initiative. We have to modernize the regime we work under; then I think we follow through with some of the other work that we feel has more priority for first nations, such as having a genuine opportunity to take advantage of business opportunities—for too long we have let others reap those benefits—not as royalty receivers but as profit makers. This is where some of our first nations want to head.
You just have to look at Chief James Ahnassay, our other chief, and at Joe, and at some of the business initiatives they are into. For a time, Chief James and his tribe owned five rigs, and they did very well. They still own several, but they have moved some of their rigs and made good profit.
The Frog Lake people are really developing, utilizing new technology in the extraction of heavy oil. The reserves are there; it's only a question of developing the technology of how to extract more heavy oil. They're well into it. They've taken over a lot of the operations from a big company.
In Saskatchewan they're really taking advantage of the TLE settlements that are occurring there. They're not just taking over as royalty receivers; they are engaging on the business side, because they realize that this is where the real return is. You get more resources—not just through money, but you begin to develop your own human resources—through capacity building.
To us, this is really just a part of a bigger process.