BILL C-8: CANADA-YUKON OIL AND GAS
LEGISLATIVE HISTORY OF BILL C-8
TABLE OF CONTENTS
BILL C-8: CANADA-YUKON OIL AND GAS
Bill C-8 was introduced and given first reading in the House of Commons on 2 October 1997. Following second reading debate on 18 October 1997, the bill was referred to the Standing Committee on Aboriginal Affairs and Northern Development. The Committee received written submissions and heard witnesses on 4 November 1997. The bill was reported back to the House of Commons on 5 November 1997 without amendment.
Enactment of Bill C-8 would implement provisions of the 1993 Canada-Yukon Oil and Gas Accord. Under that Accord, the Government of Canada agreed to transfer to the Government of the Yukon administration of and legislative jurisdiction over oil and gas in the Yukon and certain adjoining bays. Implementation of the Accord requires passage of legislation by both Parliament and the Commissioner in Council of the Yukon Territory.(1)
Bill C-8 would amend the Yukon Act and several other Acts to confer power to make laws in relation to oil and gas that would be analogous to the powers held by provinces. Federal legislation was originally introduced in June 1996 (Bill C-50, the Canada-Yukon Oil and Gas Accord Implementation Act). That bill died on the Order Paper with the dissolution of Parliament in April 1997. While Bill C-8 is largely identical to Bill C-50, it reflects some changes to that proposed legislation.
Yukon government legislation for the management and regulation of oil and gas is currently being developed to replace the Canada Petroleum Resources Act and the Canada Oil and Gas Operations Act in the Yukon. Under the existing regime in the Yukon, all management authority is held by the Government of Canada. The Canada Petroleum Resources Act and the Canada Oil and Gas Operations Act make the Department of Indian Affairs and Northern Development responsible for energy policy in the territories. The Canada Petroleum Resources Act authorises the issuing of licences and establishes the royalty regime, while the Canada Oil and Gas Operations Act prescribes the actions that government can take to manage the process by which oil and gas is produced.
Bill C-8 is part of the overall devolution of responsibilities to the Government of the Yukon from the federal government. In the case of oil and gas, the devolution process began in the mid-1980s. In 1987, the federal Cabinet approved the Northern Political and Economic Framework, which set as a central policy goal the transfer of all remaining provincial-type programs to the territorial governments. In 1988, the Northern Accord, an enabling agreement between the governments of Canada and the Yukon respecting oil and gas resource management and revenue, was signed. The two parties signed a final agreement, the Canada-Yukon Oil and Gas Accord, on 28 May 1993. To provide the background for Bill C-8, listed below are major elements of the Accord:
The Preamble indicates that the Bill C-8 respects the Canada-Yukon Oil and Gas Accord entered into on 28 May 1993. Clause 1 gives the bill the short title the Canada-Yukon Oil and Gas Accord Implementation Act.
These clauses would amend the Yukon Act to provide new legislative powers to the Yukon government. Clause 2 concerns a series of definitions in the Yukon Act. Currently, the Yukon Act contains a Schedule which describes the boundaries of the Yukon Territory. As Bill C-8 would add a second Schedule to that Act (see clause 10), clause 2 would amend the definition of "Territory" to refer to the area described in Schedule 1. The "adjoining area" is defined as that area outside the Territory, and landward of the limits described in Schedule 2. This area comprises several bays adjacent to the northern coast of the Yukon.
Other terms defined are: "oil," "gas," "oil and gas interest," and "territorial oil and gas minister." These definitions were all included in Bill C-50. Bill C-8 would, in addition, define "Yukon oil and gas laws" as "ordinances made in respect of oil and gas pursuant to sections 17 or 17.1" of the Yukon Act. Section 17 of the Yukon Act and proposed section 17.1 list the legislative powers of the Commissioner in Council of the Yukon Territory. This definition would clarify that any Yukon Act reference to Yukon oil and gas laws would relate specifically to the powers of the territorial government to make ordinances regarding oil and gas, under the terms of sections 17 and proposed section 17.1 of that Act.
Clause 3 would amend section 17 of the Yukon Act, renumbering it as subsection 17(1) and adding a new subsection 17(2) stating that any powers exercised by the Commissioner in Council in respect of oil and gas would extend to the adjoining area.
Clause 4 would add new section 17.1, which would give the Yukon Commissioner in Council explicit authority to make ordinances relating to oil and gas. Proposed section 17.1(1) provides for ordinance-making authority specifically in relation to:
Under a new section 17.1(2), the Yukon government could make ordinances in relation to the export of the primary production from oil and gas from the Territory or the adjoining area to another part of Canada. Discrimination in prices or supplies exported would not be permitted. Section 17.1(3) would enable the Yukon government to make ordinances regarding the taxation of oil and gas and the primary production from oil and gas in the Territory or the adjoining area.
In essence, the terms of proposed section 17.1 with respect to the Yukons authority over oil and gas reflect those of section 92A of the Constitution Act, 1867 with respect to provincial authority over non-renewable natural resources and forestry resources.(2) That is, proposed section 17.1 would provide the Yukon with a statutory legislative jurisdiction over oil and gas analogous to the constitutional legislative jurisdiction of the provinces over non-renewable natural resources and forestry resources under section 92A. Clause 5 would amend section 18 of the Yukon Act, which currently provides that the Yukons legislative powers are no greater than those exercised by provincial legislatures under sections 92 and 95 of the Constitution Act, 1867, by adding a reference to the new section 17.1, and a statement that the Yukons powers over oil and gas under that provision would not be greater than provincial powers under section 92A of the Constitution Act, 1867.
Clause 6 would add a new section 22.1 to the Yukon Act. This section would permit the restriction of oil and gas interests and activities in certain areas, if these interests or activities interfered with federal responsibilities. Under section 22.1(1), certain lands could be "designated" as lands in or on which no oil and gas interests and no activities could be authorized pursuant to Yukon oil and gas laws, except for specified excepted interests or activities. The wording of section 22.1(1) proposed by Bill C-8 differs from that proposed by Bill C-50, providing a more specific description of what could be restricted. Bill C-8 specifies that the prohibition would be with respect to oil and gas interests and activities pursuant to Yukon oil and gas laws, while Bill C-50 referred simply to "oil and gas interests."
Proposed section 22.1(2) would outline the reasons for which lands could be designated. It provides that lands referred to in section 22.1(1) could be "designated" by the Governor in Council on the recommendation of the Minister (defined in the Yukon Act as the Minister of Indian Affairs and Northern Development) and any other federal minister who had the administration of the lands, if oil and gas interests or activities interfered or would be incompatible with: any use of the land intended by the Government of Canada, in particular the use of the land for a national park, airport or national defence or navigation purposes; the exercise of federal powers respecting national security or environmental protection; or the settlement of an Aboriginal land claim or the implementation of a land claims settlement. Classes of excepted interests or activities specified by the Governor in Council would not be precluded in or on designated lands.
In Bill C-50, the settlement of Aboriginal land claims was included in the list of causes for restricting oil and gas interests, but no reference was made to the implementation of land claim settlements. Yukon First Nations have expressed concerns that oil and gas rights might be issued in traditional territories prior to the selection of land by First Nations under their land claims agreements.(3) Proposed section 22.1(2)(c) would appear to respond to this concern by stating specifically that the federal government would retain the authority to restrict the issuing of oil and gas interests in areas where land claims were still being implemented.(4)
Proposed section 22.1(3)-(8) would set out procedural criteria in relation to the designation process. Notice of proposed designations and excepted interests and activities would be published in the Canada Gazette, and the territorial minister would be notified prior to the publication of a notice. Views of the territorial oil and gas minister and members of the public received over the next 60 days would be considered by the responsible ministers prior to their recommending designation of lands to the Governor in Council. Proposed section 22.1(7) would provide for an interim prohibition period of 120 days following the publication of the notice of a proposed designation. Final notices of designation would be published in the Canada Gazette.
Clause 6 would also provide for the inclusion of the new section 22.2 in the Yukon Act, to specify that any exercise of federal powers regarding the management of public lands(5) and lands in the adjoining area should be consistent with the powers of the Government of the Territory in respect of oil and gas.
Clause 7 would add a new paragraph (e) to section 47(1) of the Yukon Act, to the effect that any oil and gas in the adjoining area over which authority had been transferred to the territorial government would remain vested in Her Majesty in right of Canada. This is to confirm that the Government of Canada would retain title to the adjoining area, despite the transfer of administration and control over oil and gas.
Clause 8 would alter the wording of section 47.1 of the Yukon Act, which concerns the transfer of administration and control over public lands from the federal government to the territorial government, by adding that administration and control over oil and gas in the adjoining area could also be transferred. A new section 47.2 would enable the Governor in Council, on recommendation of the Minister of Indian Affairs and Northern Affairs, to take back the administration and control of oil and gas in public lands in the Yukon or the adjoining area in order to settle or implement Aboriginal land claims. A number of criteria, including notification of the territorial oil and gas minister, would have to be met before the Minister made such a recommendation. The wording of proposed section 47.2(1) in Bill C-8 differs from that proposed by Bill C-50, in that Bill C-8 refers to the reassertion of federal control in relation to the settlement of an Aboriginal land claim or the implementation of such a settlement. This is similar to the change of wording in clause 22.1(1)(c).
The final change proposed to the Yukon Act concerns the schedule to the Act. Clause 9 would replace the heading of the existing schedule, which defines the area of the Yukon Territory, with the heading "Schedule 1 (Section 2): Description of the Yukon Territory." Clause 10 would add a second schedule to the Act, which would define the northern limit of the adjoining area.
C. Clauses 11 to 18: Related Amendments (Canada
Oil and Gas Operations Act,
Clause 11 would amend section 3(a) of the Canada Oil and Gas Operations Act by removing oil and gas in the Yukon Territory and the adjoining area from the application of the Act. As a result, the federal oil and gas regime would no longer apply to these areas. Section 5.01(2) of the Canada Oil and Gas Operations Act currently gives Yukon Surface Rights Board the power to resolve access disputes over land in the Yukon, to which the Act now applies. Clause 12 would amend section 5.01(2) to (4) of the Canada Oil and Gas Operations Act by removing references to both the Yukon Surface Rights Board and lands in the Yukon, to reflect the fact that the Act would no longer apply in the Yukon.
Clause 13 would remove "the Yukon Territory" from the definition of "frontier lands" (defined as lands that belong to Her Majesty in right of Canada, or in respect of which Her Majesty in right of Canada has the right to dispose of or exploit the natural resources) in paragraph (a), section 2 of the Canada Petroleum Resources Act. Under an amendment to paragraph (b) the adjoining area, as defined in section 2 of the Yukon Act, would not be included in frontier lands. As a result, the Yukon Territory and the adjoining area would be removed from the application of the Act, which regulates interests in petroleum in relation to frontier lands. Clause 14 would add a new section 117.1 to the Canada Petroleum Resources Act, dividing several existing licences and leases and enabling new numbers to be assigned to them. These leases currently include lands in the Yukon Territory or adjoining area; the division of the licences would separate those lands from other areas included in the licences. Rights under these existing interests would be preserved.
Clauses 15 to 18 would make several amendments to the Yukon Surface Rights Board Act. Some clauses (15 and 17) would make textual changes, not related to the transfer of oil and gas administration, to provisions of the French version of the Act and are not considered further here.
Clause 16 would make changes to provisions for resolving access or mineral rights disputes on non-settlement land.(6) Currently, section 65 of the Act gives the Yukon Surface Rights Board the power to resolve disputes regarding the mineral rights of interest holders under the Canada Oil and Gas Act and other mining-related statutes applicable in the Yukon. Section 65 would be amended to reflect the fact that the Canada Oil and Gas Act would no longer apply in the Yukon and would be replaced with an ordinance of the Yukon Territory.
Clause 18 would amend section 78 of the Yukon Surface Rights Board Act to add to the list of regulations that could be made by the Governor in Council regulations identifying, for the purposes of the Boards interpretive role regarding disputes over access, any provisions of Yukon ordinances that conferred a right of access for the exercising of a mineral right relating to oil and gas.
The clauses would provide for the transition of administration and control over oil and gas from the federal government to the territorial government. Most of these clauses would preserve rights under existing interests.
Clause 19 sets out a series of definitions that would apply in sections 20 to 28. "Existing federal interest" is defined as any interest, within the meaning of section 2 of the Canada Petroleum Resources Act,(7) in oil and gas in the Yukon Territory or the adjoining area that was in effect on the transfer date or a production licence issued on or after the transfer date by virtue of clause 23 (clause 23, discussed below, concerns pending applications). "Transfer date" means the effective date of the transfer of administration and control of oil and gas from the federal government to the Yukon government.
Under clause 20, any existing federal interests would remain in effect after the transfer date, until they expired or were cancelled or surrendered. After the transfer date, Yukon oil and gas laws would apply to these interests. Clause 20(2) and (3) provide that, except under prescribed circumstances, Yukon laws might not diminish any rights attached to existing interests. Clause 20(4) sets out in detail what would be considered rights under existing federal interests, making reference to the Canada Petroleum Resources Act (exploration, significant discovery and production licences) and the Canada Oil and Gas Operations Land Regulations (leases). Clause 20(5) provides that as long as existing federal interests, as defined in clause 20(4), remained in effect, they would have to be confirmed by Yukon laws.
Clause 21 provides that Yukon oil and gas laws that gave both a right of access to lands for the purposes of exploration, production or transportation of oil and gas and a dispute resolution mechanism in relation to access would have to provide for the resolution of such disputes by means of access orders of the Yukon Surface Rights Board under its governing statute.
Clause 22 provides that the Yukon government could not grant oil and gas interests regarding lands withdrawn from disposition pursuant to the Territorial Lands Act before the transfer date.(8) Interests could not be granted as long as these lands remained withdrawn from disposition. Clause 22, which was not included in Bill C-50, is intended to respond to concerns of the Inuvialuit Regional Council regarding the protection of the Yukon North Slope. The North Slope was withdrawn from development by order in council in the late 1970s for the purposes of settling the Inuvialuit land claim. When that claim was settled in 1984, the agreement included provisions for a management regime to be developed and put in place for the North Slope. Section 12 of the Inuvialuit Final Agreement provided for the continuation of the withdrawal order. Since 1984, two national parks have been created; however, the remainder of the area continues to be covered by the withdrawal order, pending completion of a management plan. The Inuvialuit Regional Council had expressed opposition to Bill C-50 on the grounds that it did not include adequate provision to ensure continued protection for the North Slope.
Clauses 23 to 24 would concern any applications under the Canada Petroleum Resources Act and the Yukon Surface Rights Board Act that were still pending when authority was transferred to the Yukon government. Pending applications for a declaration of commercial discovery, for a production licence or for access to Yukon lands, would be dealt with as if the existing regimes continued to apply.
Clause 25 would clarify the responsibilities of the Government of Canada and the Government of the Yukon regarding damages in respect of the oil and gas regime, before and after the transfer date.
Clause 26 provides that notification of the transfer date would be printed in the Canada Gazette. Under clause 27, the Yukon government could make oil and gas laws prior to the transfer date, but such laws would have no effect before that date.
The transfer of resource responsibilities from the federal government to the Yukon has been an objective of successive Yukon governments. Federal legislation has been in the drafting process for several years, as has territorial legislation to implement the Canada-Yukon Oil and Gas Accord. In January 1997, the Yukon government, the Council of Yukon First Nations, Kwanlin Dun First Nation, Liard First Nation and the Kaska Tribal Council signed a set of agreements on devolution, including agreements on the oil and gas transfer. Working groups, which include Aboriginal representatives, are currently developing territorial legislation for oil and gas administration.
During the consultation and drafting processes leading up to Bill C-8, the most prominent objections were expressed by Yukon First Nations. Concerned that the federal and Yukon governments were pursuing the transfer of administration over resources prior to the completion of land selections by various First Nations under the Yukon land claims agreement, the Yukon First Nations requested confirmation that oil and gas rights would not be issued in traditional territories where land selections had not been made. More generally, First Nations expressed their preference for completing final land claims and self-government agreements prior to the completion of the overall devolution initiative; the federal government has taken the position that the two can proceed simultaneously.
Witnesses from the federal Department of Indian Affairs (DIAND), the Yukon government, the Council of Yukon First Nations and the Liard First Nation appeared during the hearing on Bill C-8 held by the House of Commons Standing Committee on Aboriginal Affairs. The Inuvialuit Regional Council provided the Committee with a written brief.(9)
Representatives of the Council of Yukon First Nations and the Liard First Nation noted their general opposition to devolution prior to the completion of Yukon First Nation final land claim and self-government agreements. They gave their support to Bill C-8, however, citing the January 1997 memorandum of agreement reached by the Yukon government, the Council of Yukon First Nations, Kwanlin Dun First Nation, Liard First Nation and the Kaska Tribal Council. Through the memorandum of agreement, the Yukon government agreed that it would not grant third-party rights in the traditional territory of a Yukon First Nation that had not yet concluded a land claim agreement without that First Nations consent. Further, the Yukon government committed itself to giving this understanding the force of law by including this restriction in the future Yukon Oil and Gas Act. The Yukon government and Yukon First Nations also agreed to work together on a government-to-government basis to develop Yukon legislation dealing with oil and gas. These assurances served to resolve concerns of Yukon First Nations regarding the protection of traditional lands from oil and gas development prior to the conclusion of final land claim agreements.
In its brief, the Inuvialuit Regional Council (IRC) noted that its objections to earlier drafts of Bill C-8 had been based on the grounds that adequate provision had not been made to safeguard Canadas obligations under the Inuvialuit Final Agreement in relation to protection of the Yukon North Slope. Specifically, the IRC was concerned with the transfer of management jurisdiction over the Yukon offshore and with the maintenance of the withdrawal order under section 12 of the Inuvialuit Final Agreement.
The consultation process, which resulted in some changes to the initial draft of the legislation, partially addressed Inuvialuit issues (see discussion of clause 22). The IRC was still concerned, however, that Bill C-8 did not specifically recognize the responsibilities of the federal government in the Yukon North Slope. In its view, Bill C-8 would give the federal government the authority to protect the North Slope region, but would not require the government to act. The IRC would prefer that the legislation clearly recognize and address the special conservation regime of the North Slope.
DIAND officials told the Committee that, in their view, the North Slope would be adequately protected. Development in those areas designated as national parks is prohibited by the National Parks Act. In addition, the Western Artic (Inuvialuit) claim settlement Act is protected in the Constitution; thus, in the case of its conflict or inconsistency with the proposed federal transfer or the territorial oil and gas legislation, the settlement legislation would prevail.
(1) Under the Yukon Act, the Commissioner in Council responsible for adopting ordinances for the Yukon Territory consists of an appointed Commissioner and an elected Council.
(2) Section 92A was added to the Constitution by the Constitution Act, 1982.
(3) In 1993 the federal government, the Yukon Territorial Government, and the Council for Yukon Indians (representing the14 Yukon First Nations) reached an Umbrella Final Agreement for the land claim of the Yukon First Nations. Final land claim agreements, through which allotments of land for each First Nation and other benefits are provided, were signed at that time with four First Nations. Two other First Nations have since come to final agreements.
(4) It has been the federal governments policy not to issue oil and gas rights in traditional territories where land selections have not been made.
(5) Public lands are defined in the Yukon Act as any lands, or any interest in any land, in the Territory that belongs to Her Majesty in right of Canada or of which the Government of Canada has the power to dispose.
(6) Under the Yukon First Nations Umbrella Final Land Claim Agreement, Yukon First Nations are provided with three types of settlement land: category A, category B and fee simple. Non-settlement land is defined in the Yukon Surface Rights Board Act as all land and water in the Yukon Territory, other than settlement land, and includes mines and minerals, other than specified substances, in category B settlement land and in fee simple settlement land.
(7) Interest is defined in section 2 of the Canada Petroleum Resources Act as any former exploration agreement, former lease, former permit, former special renewal permit, exploration licence, production licence or significant discovery licence.
(8) The Territorial Lands Act provides that the Governor in Council may order the withdrawal of any tract or tracts of territorial lands from disposition under the Act.
(9) These groups were invited to appear, but declined: Association of Yukon Communities, Canadian Association of Petroleum Producers, Canadian Parks and Wilderness Society, Kaska First Nations, Porcupine Caribou Management Board, Ross River First Nation, Yukon Chamber of Commerce, Yukon Chamber of Mines, Yukon Conservation Society.