Canada: Energy Update - January, 2010

Last Updated: February 4 2010

This is a joint publication between our Energy, Regulatory and Energy Litigation Practice Groups

Indian Property - Lien and Seizure Restrictions
By David Macaulay, Denise Bright, Mike Callihoo and Luke Morrison

Aboriginal groups have become much more active in the commercial mainstream in recent years, taking significant roles in joint ventures and other commercial arrangements. Much of this activity in Western Canada has been driven by the abundant energy related opportunities on or near reserve lands. In many cases, creative financing and structuring for the participation of the aboriginal group in the venture is required. Whether the venture involves a loan to the aboriginal group, a development on reserve lands or other business undertaking in which security is being taken over property of such aboriginal group located on reserve lands, the impact of restrictions on seizure and execution against Indian property under the Indian Act (Canada) must be examined. This article does not apply to any grant, lease, permit, licence or other disposition respecting oil and gas in Indian lands which are governed by the Indian Oil and Gas Act (Canada) and related regulations. Note that the terms Indian, band and reserve used below are as defined in the Indian Act.

The Section 89 Effect

Section 89(1) of the Indian Act provides that the real and personal property of an Indian or a band situated on a reserve is not subject to charge, pledge, mortgage, attachment, levy, seizure, distress or execution in favour or at the instance of any person other than an Indian or a band. In essence, it results in reserves being a safe-haven for an Indian or a band seeking to shield qualifying real or personal property from creditors.

Lenders to Indians and bands are not the only parties who should be concerned with respect to the restrictions under Section 89(1). For instance, joint ventures or partnerships with bands involving the joint development of assets on reserve lands may also be potentially exposed to the Section 89(1) restrictions such that the non-Indian participant may be prevented from seizing even its share of the assets, particularly where the interest is an undivided interest. Careful attention to the potential impact of Section 89(1) restrictions is important.

Real Property and Fixtures

The protection afforded by Section 89(1) to an Indian or band's real property is broad. Any interest in reserve land held by Indians or a band will fall within Section 89(1). However, the real property protections contained in Section 89(1) are mitigated by statutory exceptions. For instance, the Indian Act contains an express exception in respect of leaseholds in "designated lands". "Designated lands" are defined in the Act as being reserve lands to which a band has, for a limited time, released or surrendered its rights and interests. Accordingly, a leasehold interest in designated lands is not subject to the Section 89(1) restrictions.

In commercial ventures involving the development of assets on reserve lands, it is also important to assess any risk of personal property becoming affixed to such lands which may qualify as interest in land, thereby attracting the Section 89(1) protections.

Personal Property

The implications of Section 89(1) are less clear in respect of personal property. Section 89(2) clearly exempts conditional sales. Section 90(1) of the Indian Act provides that certain types of personal property are deemed always to be situated on reserve. These include property purchased by the government with Indian moneys, or property given to Indians or to a band under a treaty or agreement with the government.

However, in applying Section 89(1), the courts have struggled to provide a clear definition of what constitutes "on reserve" property. Case law indicates that the question of whether the property of an Indian or band is situated on or off reserve cannot be determined solely by the physical location of the property. In some cases, the courts have applied the "paramount location" test, which examines the pattern of use and safekeeping of the property in question. For example, in one case a school bus was physically stored off reserve, but its paramount location was found by the court to be on reserve due to its use and regular storage on reserve land.

In other instances, the courts have used a "connecting factors" analysis to determine the situs of personal property. Here the court will weigh the various connecting factors which tie the property to one location or another. Where the property is employment income, the residence of the individual, the type of work being performed, and the place where the work was done have been given great weight. For unemployment insurance benefits, courts have given the most weight to where the qualifying work was performed. In the context of business income, courts have placed greater emphasis on where the work was done and where the source of the income was situated than on other factors.

Other Exceptions

One general exception to the Section 89(1) restrictions lies in a corporate structure. The courts have determined that a corporation is not considered to be an Indian or a band within the meaning of the Indian Act, even if a corporation has its registered office on reserve and all shareholders are registered Indians and band members residing on reserve. This exception is often relied on by lenders or other parties wishing to take security over property that would otherwise be subject to Section 89(1). However a common obstacle to the use of a corporation is the lack of tax effectiveness of such structure to the band. For tax reasons, bands often prefer to use a partnership structure which may not be exempt from the Section 89(1) restrictions.

A further exception to the Section 89(1) restrictions to be noted is that the real and personal property of an Indian or band situated on a reserve is subject to charge, seizure, or execution in favour of an Indian or a band. Accordingly, a band can enforce security against on-reserve property of an Indian or another band, and an Indian may enforce a debt or seize the on-reserve property of another Indian or band.


Once the Section 89(1) risks associated with a proposed venture have been identified and assessed, to the extent that an exception to the restrictions is not available, the parties will need to consider ways of mitigating such risks including the structuring of the commercial agreements with appropriate covenants, rights, indemnities, representations and warranties, each of which will vary in their efficacy, or otherwise consider whether an enhanced return to compensate a party for bearing such risks is appropriate. Where the venture is robust, creativity abounds.

Removing Roadblocks: A Legislative Solution
By Alison Gray

Land disputes associated with oil and gas development may give rise to roadblocks or other forms of protest in an attempt to impede access by oil and gas and other resource companies to those lands. The Alberta government has enacted legislative provisions that may assist in providing a remedy to those who find their use of public roads to access well sites or other facilities hindered by such protest.

Subsections 54.03(6) and (7) of the Public Lands Act (PLA) offer a solution to oil and gas producers faced with blockades or disruptions on public roads to which the company has a right of access.

Sections 54.01 and 54.03 of the PLA were passed by the Alberta Legislature in order to allow the Alberta government " deal swiftly and effectively with instances of non-compliance of public lands involving industrial roads." (Hansard, No. 1691, November 18, 2003) Section 54.01(3) of the PLA provides:

No person shall block, disrupt, hinder, impede, interfere with or otherwise obstruct free access to or passage on or over, or use by any other person of, a highway, road or trail located on public land unless that person was authorized to do so by the Minister or under this Act or the regulations.

Section 54.01(6) provides that anyone who has been prevented from having free access to or passage on or over a road due to a contravention of s. 54.01(3) may apply to a judge of the Court of Queen's Bench for a short-term or long-term order. The only difference between a short-term and long-term order is that the short-term order must be for a period of seven days and a long-term order must be for a period exceeding seven days, but not exceeding one year.

Pursuant to s. 54.03(3), an application for a short-term order can be made ex parte and must be supported by affidavit evidence, which may be based on information and belief. An application for a long-term order must be made by originating notice on at least two days' notice and must be supported by affidavit evidence. In granting a short-term or long-term order under the PLA, a Judge may:

(a) Prohibit any person from engaging in or continuing in the activity that constitutes a contravention,

(b) Authorize a police officer to remove or seize and remove any material, barrier, equipment, vehicle, structure or obstruction used in the contravention, and

(c) Make any other order the Judge considers appropriate.

Thus, in those cases in which a company finds its right to access a public road is obstructed and operations impeded by a protesting group, an order may be sought to prohibit any such groups from hindering access. While this provision has not yet been the subject of a reported decision, it represents another avenue for resolving such matters on a short-term basis.

Energy Development in British Columbia versus Alberta: Comparing Aboriginal Consultation Processes
By Duncan M. McPherson, Deirdre Sheehan, Marie Buchinski

Differing legal bases for the principal oil and gas regulators in B.C. versus Alberta result in divergent approaches to aboriginal consultation, with practical implications for developers.

The Energy Resources Conservation Board (ERCB) in Alberta is an administrative tribunal, with the capacity to hold hearings on energy project applications. As a quasi-judicial body, independent of government, the ERCB does not have a duty to consult holders of aboriginal or treaty rights (Dene Tha' v. Alberta (Energy and Utilities Board), 2005 ABCA 68). Analogizing from the recent Standing Buffalo decision (see Are Administrative Tribunals Required to Rule on the Crown's Aboriginal Consultation Duties?) involving the NEB, it appears the ERCB is also not required to decide on the adequacy of Crown consultation when assessing proposed projects, despite the provisions of Alberta's Administrative Procedures and Jurisdiction Act that authorize the ERCB to determine questions of constitutional law.

Akin to the ERCB in Alberta, the Oil and Gas Commission (OGC) regulates oil and gas activities, including pipelines, within British Columbia. In an effort to streamline regulatory requirements, however, B.C. established the OGC in 1998, not as an administrative tribunal, but rather as an agency of government issuing all permits required for oil and gas development through a single wicket. As such, unlike the ERCB and NEB, the OGC does not hold hearings on energy applications. As a branch of government, however, the OGC does have a constitutional duty to consult aboriginal parties affected by its decisions on energy developments (Saulteau First Nations v. British Columbia (Oil and Gas Commission), 2004 BCCA 286). Moreover, a statutory duty on the OGC to consult aboriginal communities is also established by section 4 of the Oil and Gas Commission Act, which requires the OGC to "encourage the participation of First Nations and aboriginal persons in processes affecting them."

In practice, consultation processes for projects can unfold quite differently in B.C. as compared to Alberta. In B.C., the OGC takes the lead in consultations with First Nations affected by proposed energy developments. The OGC has developed established consultation processes with the aboriginal communities with which it has frequent contact. The details of these processes are set out in several Consultation Process Agreements with the respective First Nations. Certain Treaty 8 First Nations in northeast B.C., where natural gas development is focused, have also entered an Economic Benefits Agreement providing financial benefits linked to economic activity and provincial revenues generated in the area.

Industry is encouraged by the OGC to engage aboriginal communities prior to submitting applications to the Commission. In addition, the OGC may invite proponents to participate in discussions or issue resolution processes when the Commission consults with First Nations on applications, in order to identify options to minimize adverse impacts. Ultimately, however, the OGC undertakes the consultation with First Nations, is responsible for its adequacy, and reflects any accommodation of aboriginal concerns in conditions to project approvals.

In Alberta, in contrast, oil and gas developers are charged with initiating and, in many respects, conducting First Nations consultations. This is a function of two instruments. First, the ERCB's general consultation directives identify the parties with whom the proponent is required to consult. The ERCB expects proponents to address potential impacts on aboriginal groups as part of this public consultation. Second, where decisions of the Crown (not the ERCB), such as dispositions of Crown land, are required for an energy project to proceed, then the Alberta government's constitutional duty to consult potentially affected aboriginal groups is engaged. However, pursuant to Alberta's First Nations Consultation Guidelines on Land Management and Resource Development, the government expects project proponents to do much of the groundwork by carrying out procedural aspects of consultation such as notifying First Nations of the project proposed, providing them project-specific information, and meeting to discuss comments and concerns to determine potential mitigation measures.

The law recognizes that government can delegate procedural aspects of its consultation obligations to third parties, but ultimate legal responsibility rests with the Crown, raising potential litigation risk if excessive delegation occurs. This risk can be mitigated by seeking to involve Crown representatives directly in consultation efforts, regularly corresponding with the Crown, undertaking consultations early in project development phases, and, to the extent possible, discussing project-related issues with aboriginal groups on a with-prejudice basis. Project proponents remain vulnerable to court cases concerning alleged inadequacies in Crown consultation, which may cause project approvals to be quashed or delayed. In B.C., proponents may benefit from the proactive role of the OGC in aboriginal consultation to help allay this risk, whereas in Alberta, proponents are charged with the procedural aspects of aboriginal consultation, potentially affording them more control over the outcomes of consultation processes.

Are Administrative Tribunals Required to Rule on the Crown's Aboriginal Consultation Duties?

The National Energy Board (NEB), in its quasi-judicial function, does not owe a fiduciary duty to aboriginal parties (Québec (Attorney General) v. Canada (National Energy Board), [1994] 1 S.C.R. 159). The NEB is not the Crown nor its agent. On October 23, 2009, the Federal Court of Appeal confirmed that the NEB does not itself owe a duty of consultation to aboriginal communities affected by applications before it. The Court also clarified that the NEB, when considering the merits of an application, is not required to determine whether a Crown duty of consultation exists in respect of the proposed project, or whether such a duty has been discharged: Standing Buffalo Dakota First Nation v. Enbridge Pipelines Inc., 2009 FCA 308.

In the Standing Buffalo decision, three First Nations appealed to the Federal Court of Appeal the decisions of the NEB to grant approvals to two new major trans-border crude oil pipelines and one diluent pipeline. The Appellants argued that the NEB was required and failed to consider whether the Crown had adequately consulted the First Nations in respect of the proposed projects. The Court denied the appeal, finding that because the applicants for the pipelines were all private sector entities, the NEB's determinations on the applications did not need to encompass conclusions on the Crown's consultation. The Court further found that the proponents were required to consult with the First Nations pursuant to NEB consultation requirements, that this process ensured due regard to aboriginal rights by the project applicants, and that consideration of the performance of these obligations was within the NEB's mandate. Furthermore, while the NEB is not required to adjudicate the adequacy of Crown consultation as part of its hearings, the Court of Appeal stressed that aggrieved aboriginal groups would have recourse to court-based litigation to resolve such issues.

However, in Carrier Sekani Tribunal Council v. British Columbia (Utilities Commission), 2009 BCCA 67, the British Columbia Court of Appeal (BCCA) reached the opposite conclusion, holding that the British Columbia Utilities Commission (BCUC) did have an obligation to decide consultation disputes which arose within the scheme of its regulation. In Standing Buffalo, the Federal Court of Appeal had distinguished Carrier Sekani on the basis that the applicant before the BCUC (B.C. Hydro) was the Crown or its agent, whereas the applicants before the NEB were private sector entities. On December 5, 2009, the Supreme Court of Canada granted leave to appeal the BCCA Carrier Sekani decision on the general question of, "Does the honour of the Crown require administrative tribunals to decide disputes about the Crown's duty to consult First Nations, regardless of the tribunal's statutory mandate?" In December 2009, an application for leave to appeal Standing Buffalo to the Supreme Court of Canada was also filed by two of the First Nations involved. The applicant First Nations have asked, if leave to appeal is granted, that the Supreme Court hear the appeal of Standing Buffalo concurrently with the appeal of Carrier Sekani.

The Supreme Court has not yet rendered a decision on whether to grant leave to appeal the Federal Court of Appeal's decision in Standing Buffalo. However, given that leave has been granted in Carrier Sekani, there is some prospect that leave may also be granted in Standing Buffalo and that further direction on these issues will be forthcoming from the Supreme Court.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.