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Indigenous People Say Canada Squandered $3 Billion of Their Oil — And Now They’re Suing

Prime Minister Justin Trudeau campaigned on a promise to restore a nation-to-nation approach of dealing with First Nations — so how the government responds to this suit could sour a relationship it’s trying to restore.
Photo by Larry MacDougal/The Canadian Press

Two First Nations are suing the Canadian government for an estimated $3 billion in lost oil and gas revenues.

The Poundmaker and Onion Lake First Nations say the federal government failed to fully extract oil and gas reserves on their land — land they say was "ripe for exploitation," according to the statement of claim for the class action suit, filed in Federal Court on Monday. And as the government sat idly by for 20 years, companies operating on neighboring land drained their resources, the suit claims.

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The lawsuit follows a worldwide crash in the price of oil, which has First Nations worrying about what the downturn could mean for revenues, according to Indian Oil and Gas Canada (IOGC), the federal agency responsible for leasing and royalties of oil and gas on First Nations reserves.

And to make matters worse for the Canadian government, Prime Minister Justin Trudeau campaigned on a promise to restore a nation-to-nation approach of dealing with First Nations — so how the government responds to this suit could sour a relationship it's trying to restore.

"It's time for a new fiscal relationship with First Nations that gives your communities sufficient, predictable and sustained funding," Trudeau said in December as he announced a reset of Canada's relationship with Indigenous communities.

According to the statement of claim filed by the two First Nations located in Saskatchewan, in the early 1990s Poundmaker First Nation voted to conditionally grant its oil and gas rights and interests to the Crown. Onion Lake also voted for a similar arrangement with the Crown.

The First Nations say the Crown has delegated its responsibilities for oil and gas to the IOGC and Indigenous and Northern Affairs, and so the Crown is liable for any acts and omissions by the IOGC.

The IOGC and Indigenous and Northern Affairs were supposed to find out how much oil there was to exploit, actively promote its exploitation, negotiate leases to exploit those resources and then pay the royalties to the First Nations, the suit states.

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"Generally, the IOGC did not actively promote and solicit leasing opportunities to exploit the oil and gas rights on their designated reserve lands under its management and control," the suit states.

Instead, the suit says, the government sat idly by for decades as oil and gas companies operating on adjacent lands drained the resources away.

Forty-one wells were drilled on Poundmaker land, with 10 of those wells potentially producing oil. Meanwhile on land next to Poundmaker, 242 wells were drilled, with 86 of those producing oil. It was a similar story on other First Nations, the class action says.

"It was reasonably foreseeable that Class Members would suffer damages as a result of their failure to effectively promote, secure, administer and optimize economic rents from subsurface oil and gas resources and related surface rights," the claim states.

In Canada, First Nations are often at the forefront of resource extraction and pipeline projects, battling for environmental rights, fair consultation on projects, and lobbying for a piece of the anticipated windfall.

The band offices of Poundmaker and Onion Lake First Nations did not immediately respond to requests from VICE News, and neither did Indigenous and Northern Affairs Canada.

Follow Hilary Beaumont on Twitter: @hilarybeaumont