Compliance and Enforcement at Indian Oil and Gas Canada
Indian Oil and Gas Canada (IOGC) is responsible for the management of oil and gas on designated First Nations lands in Canada. In responding to changes in the oil and gas sector, IOGC is modernizing its regulations and approach to compliance. A new Compliance and Enforcement unit has been started to manage the activities across IOGC. Embedded in these changes is a risk-based approach to decision-making, intended to proactively focus attention to areas of risk and to enhance efficiencies in our operational business processes. Risk and compliance information is gathered by our operational business units, then centralized for a holistic approach to regulatory compliance. Contract holders are subject to the Indian Oil and Gas Act, 2009 and the Indian Oil and Gas Regulations, 2019 (IOGR 2019) including obligations to pay rentals, royalties, and to protect the environment of First Nation reserve lands.
Compliance and Enforcement Framework
The objective of the Compliance and Enforcement Framework is to ensure IOGC uses all available tools to promote regulatory compliance.
The Model is based on:
- Transparency,
- Procedural fairness,
- Effective communication, and
- Timely, consistent, coordinated, integrated and appropriate responses.
The Model includes:
- Clear and enforceable regulatory requirements,
- Education and outreach,
- Compliance verification activities, and
- Appropriate review and enforcement actions.
It provides processes and procedures: for prevention / avoidance of non-compliance instances; for determination if there exists a situation of potential noncompliance; and, for adopting a measured approach to respond appropriately to address any instances of non-compliance.
Risk-based approach
IOGC refers to risk in the context of a measure of the impact of uncertainty in its ability to meet its objectives.
- IOGC ensures equitable production, fair prices and proper collection of royalties on behalf of First Nations and attain compliance with and the administration of the regulatory framework in a fair manner. The primary risks related to these objectives are:
- Royalties not collected for production on First Nations lands resulting in loss of royalty revenue for First Nations;
- Lease rentals not collected on a timely basis resulting in a loss of rental income for First Nations; and
- Environmental effects of projects on First Nations lands are not carefully considered, resulting in environmental liabilities and damage to the land.
IOGC encourages companies to explore for and to develop oil and gas resources on First Nations lands in a manner that is respectful of the land and which is in alignment with the needs and aspiration of the community.
IOGC's Compliance and Enforcement Unit reviews risk and compliance information from all business units across IOGC and maintains a repository of potential non-compliance instances of all regulated entities. When this information suggests continued, prolonged, or multiple instances of non-compliance, or a significant single non-compliance, timely action will be taken.
The business units of IOGC are responsible for monitoring, tracking and assessing potential instances of non-compliance as part of their regular, day-to-day activities. The business units then inform the non-compliant party and provide them with an opportunity to address the non-compliance event. Often these reminders are all that are required to assist the company to become compliant once more. Continued, prolonged, or multiple instances of non-compliance will be escalated to IOGC's Compliance and Enforcement Unit for an integrated review. IOGC Compliance and Enforcement Unit will review the performance of the regulated entity across IOGC's operations. Where non-compliance is persistent, and the risk of default is higher, more stringent actions may be required. The higher risk situations will be addressed with actions commensurate with the assessed risk and may include the cancellation of the lease.
Based on the Compliance and Enforcement Framework, generally, a non-compliant entity will be made aware and provided with opportunity to comply. The IOGR, 2019 provides for timely escalation of the enforcement process once that process starts. The regulations stipulate time frames for action and consequences of non-compliance that will be adhered to by IOGC's Compliance and Enforcement Unit. IOGC's Compliance and Enforcement will use all available avenues to promote compliance or to respond appropriately to address instances of non-compliance.
For any further questions or to learn of IOGC's Compliance and Enforcement Framework, you may reach out via email to aadnc.iogccompliance.aandc@canada.ca to schedule an appointment.