February 9, 2016 2:28 pm
Updated: February 10, 2016 7:24 am

$3 billion lawsuit begun over aboriginal oil


Lawyers behind a lawsuit over a long-simmering dispute concerning what two First Nations call federal mishandling of energy resources on their reserves say other bands are considering joining the legal action.

In a statement filed late Monday, the Onion Lake and Poundmaker Cree bands accused Indian Oil and Gas Canada of failing to promote and develop energy resources on their lands and of failing to protect those resources from being drained by wells adjacent to them.

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Harvey Strosberg, one of two lawyers representing the bands, said he’s opened talks with other bands interested in joining the lawsuit.

“We want the court to make it into a class action,” said Strosberg.

“We’ve talked to at least another Five Nations and they are very supportive. Some of them are in the process of retaining us.”

Because aboriginal bands are not allowed to disburse reserve lands, energy companies seeking to develop the oil and gas beneath them must deal with Indian Oil and Gas Canada.

That agency is responsible for promoting development, negotiating deals, issuing licences, collecting royalties and monitoring activity.

Because the bands can’t do the work themselves, the agency is obliged to look after First Nations interests, said Strosberg.

“The Indian nations can’t do anything. They have to pass this off to the federal government. (The government) said, ‘You can’t do it yourself … we’ll take care of you.'”

Figures in the statement of claim — which contains allegations not yet tested in court — question that care.

The claim alleges there have been 41 wells drilled on Poundmaker lands with 10 producing. That compares with 242 wells — with 86 producing — immediately adjacent to the Saskatchewan reserve.

The situation is similar for Onion Lake, which straddles the Saskatchewan-Alberta boundary, says the statement.

“The (agency) did not actively promote and solicit leasing opportunities to exploit the oil and gas rights on the designated reserve lands.”

As well, the statement of claim says oil and gas pools flow underground in response to pumping activity. It claims Ottawa didn’t protect resources under reserve lands from being drained by wells adjacent to them.

“If you have 100 wells pumping on the adjacent property and 10 wells pumping on the reserve, you’ll drain more than your share,” Strosberg said.

The statement also asks for a full audit of Indian Oil and Gas Canada’s handling of First Nation energy revenues. The lawsuit claims $3 billion in damages.

The agency has long been a target of First Nations, said Blaine Favel, former head of the Federation of Saskatchewan Indian Nations, now head of an oil and gas company.

“This is archaic, colonial law,” he said. “(Criticism) has been around as long as they’ve been the regulator.”

Favel said the agency has long been under-resourced and isn’t keeping up with the demands of the modern industry. As well, it serves as regulator, license issuer, land manager, royalty collector and watchdog — far too many roles for one office.

“These are delicate at best and sometimes incompatible,” said Favel.

Strosberg said he hopes the federal government will choose to negotiate a settlement.

“If you want to fight, we’ll fight, but if you want to talk, we’ll talk,” he said. “We prefer to talk.”

Assembly of First Nations Grand Chief Perry Bellegarde also encouraged the government to settle.

“Based on our natural resource wealth, First Nations should be among the wealthiest in Canada, but federal mismanagement and neglect of its fiduciary duties has resulted in lost revenue for First Nations, perpetuating a cycle of poverty,” he said in a statement.

— Follow Bob Weber on Twitter at @row1960

© 2016 The Canadian Press

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