First Nations sue federal government for not doing enough for on-reserve oil, gas development

February 10, 2016

Onion Lake and Poundmaker Cree Nations filed a class action lawsuit Monday against the federal government claiming $3 billion in damages and alleging “a continuing breach of fiduciary duty and negligence on the part of the federal government.”

“For many years the federal government has controlled the exploitation of oil and gas rights on First Nation reserves. The federal government has botched this important responsibility,” said Onion Lake Chief Wallace Fox in a written statement.

Onion Lake and Poundmaker Cree Nations claim that their reserve lands and reserve lands of the other class members contained oil and gas rights “which were ripe for exploitation.” But instead of drilling occurring on the reserve lands for which the First Nations designated oil and gas rights to the Crown, drilling occurred on lands bordering the reserves.

“We are a poor people and the revenue from those resources could have done much good for our community,” said Poundmaker Chief Duane Antoine in a statement.

According to the statement of claim, Poundmaker Cree Nation says there are 10 wells drilled on the perimeter of the reserve to every one well operating on the reserve.

The lawsuit claims that the federal government, the Department of Indian Affairs, and Indian Oil and Gas Canada owed a “fiduciary duty to the Class members and each breached its fiduciary duty;” that they owed a duty of care to the Class members and each breached the standard of care and was negligent; damages for breach of fiduciary duty and negligence in the amount of $3 billion.

The lawsuit claims the federal government, through Indian Oil and Gas Canada, has not done enough to “actively promote and solicit” exploration and development by oil and gas companies on reserve lands.

“Productional drainage” is a reality, says Joe Dion, chairman and CEO of Frog Lake Energy Resources Corp., which is wholly owned by the First Nation. “I know there’s been that issue for a long time with First Nations.”

Dion says that 15 years ago there was hardly any oil or gas activity on Frog Lake First Nation. Now the company leases and subleases reserve land for primarily oil development with partners both on and off the reserve.

One of the issues, says Dion, is although First Nations may sign over their oil and gas rights to the Crown with the understanding that development should be pursued, there is no way to guarantee development.

“One of the problems with right now is that Oil and Gas Canada doesn’t have that capability to order companies to drill on the inside of the reserve,” said Dion.

But that could be changing.

“There’s a regulatory process happening right now that will allow OGC to do that,” said Dion.  “Hopefully that gets done fairly quickly.”

The Indian Oil and Gas Act amendment received royal assent in 2009, but according to INAC’s website, it “will not come into force until there are new Indian Oil and Gas regulations. A joint process is currently underway with oil and gas producing First Nations and the Indian Resource Council to develop the new regulations.”

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

Dion says it is not his decision as to whether or not Frog Lake First Nation should join the class action lawsuit.

“Maybe this will get the governments to be more careful and to take action on these types of things going forward. There’s always something positive that comes out of these types of (legal) actions,” he said.

Assembly of First Nations National Chief Perry Bellegarde commended Onion Lake and Poundmaker Cree Nations for initiating the lawsuit.

“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. I encourage the Crown to begin negotiations in good faith with all parties involved, to work towards a reconciliation that honours First Nations title and rights,” said Bellegarde in a statement.