Summary: The podcast explores a potentially multi-billion dollar tax claim by the Enoch Cree Nation against the Canadian government related to an oil export tax from the 1970s and 1980s. The claim is based on concerns about the legality and fairness of the tax, which the Enoch Cree Nation argues violated their economic rights and interests as a First Nation. While quantifying the exact financial impact is extremely challenging, the broader significance of the case goes beyond just monetary compensation, raising important questions about respect, autonomy, and righting historical injustices against Indigenous communities in Canada.
In this episode, we dive deep into the fascinating story of the Enoch Cree Nation’s potential claim against the Canadian government related to an oil export tax from the 1970s and 1980s. Our guests explore the historical context, the legal arguments, and the complex financial implications of this long-standing issue.
Main Topics Discussed
- Background on the 1970s oil crisis and Canada’s introduction of the oil export tax (00:00 – 01:26)
- Concerns from the Department of Indian Affairs about the legality of applying this tax to First Nations (01:27 – 02:24)
- The Enoch Cree Nation’s three core arguments:
- Price disparity – Royalties based on artificially low domestic prices while oil was exported at higher global prices (02:25 – 03:49)
- Indirect taxation – The export tax effectively reduced their royalties without their consent (03:50 – 04:29)
- Broken promises – Exclusion from government relief programs available to other oil producers (04:30 – 06:10)
- The Enoch Cree Nation’s early efforts to seek redress, including legal challenges in the late 1980s and early 1990s (06:11 – 07:50)
- The challenges in quantifying the potential scale of the Enoch Cree Nation’s claim due to incomplete historical records (07:51 – 11:10)
- The broader implications of this case beyond just financial compensation, touching on issues of justice, autonomy, and the treatment of First Nations (11:11 – 13:14)
Key Terms and References
- OPEC Oil Crisis: The 1973 oil crisis caused by the Organization of the Petroleum Exporting Countries (OPEC) that led to skyrocketing global oil prices.
- Indian Act: Legislation that outlines the relationship between the Canadian government and First Nations.
- Habema Bands: A group of First Nations communities, including the Enoch Cree Nation, that have collaborated on various issues.
- Samson Indian Band v. Canada (1989) and Ermineskin Nation v. Canada (1992): Landmark court cases that challenged the oil export tax, but were ultimately dismissed due to time limitations.
- Price Disparity: The difference between the regulated domestic price of oil and the higher global export price.
- Indirect Taxation: The concept of a tax burden being passed down to a party that did not directly pay the tax.
Here are some of the best quotes from the transcript:
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“Imagine finding out, like really finding out that you might be owed millions, maybe even billions, in back taxes.”
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“It’s about righting a historical wrong and making sure that an injustice like this isn’t repeated.”
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“It really makes you think, if this claim is successful, could we see other First nations coming forward seeking similar redress?” –
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“It’s about respect. Autonomy, having a say in how your land, how your resources are managed.”
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“This case, it feels much bigger than that. It feels like this fundamental question of respect.”
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“It’s definitely a possibility. This could set a precedent. And I think even more importantly, it raises these questions about how resource projects are approached in Canada.”
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Uncovering a Potential Billion-Dollar Injustice: The Enoch Cree Nation’s Fight for Tax Fairness
Exploring a Decades-Old Oil Export Tax Dispute
Imagine finding out that your community might be owed millions, or even billions, in back taxes. This is the situation potentially facing the Enoch Cree Nation, as they delve into a complex and fascinating story about resource rights and potential injustice.
The crux of the matter lies in an oil export tax introduced by the Canadian government in the 1970s and 1980s, during a time of global oil price volatility. While the tax was intended to stabilize domestic energy prices, it may have had unintended consequences for First Nations communities like the Enoch Cree Nation.
The Enoch Cree Nation’s Three-Pronged Argument
The Enoch Cree Nation’s claim against the Canadian government rests on three core arguments:
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Price Disparity: The royalties paid to the Enoch Cree Nation for oil production on their land were calculated based on the artificially low domestic price of oil. However, when that oil was exported, it was sold at the much higher global price, leaving the Enoch Cree Nation potentially shortchanged.
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Indirect Taxation: The oil export tax was not levied directly on the Enoch Cree Nation, but the band argues that it effectively acted as a hidden tax burden that they never agreed to.
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Broken Promises: Despite contributing a significant portion of Alberta’s oil production (estimated between 2-3%), the Enoch Cree Nation was excluded from government programs designed to offset the burden of the export tax, while other producers received assistance.
A Pattern of Disregard?
The Enoch Cree Nation’s case is further bolstered by internal government memos from the 1970s that expressed concerns about the legality of imposing the tax on First Nations communities. These memos suggested that First Nations should be included in any relief programs, but it appears these recommendations were ultimately ignored.
A Decades-Long Struggle for Justice
The Enoch Cree Nation has been actively seeking redress for this issue since as early as 1974, with the Samson Indian Band and Ermineskin Nation also challenging the tax in landmark court cases in the late 1980s and early 1990s. However, both of these cases were ultimately dismissed due to time limitations, leaving the Enoch Cree Nation to continue their fight for justice.
Quantifying the Potential Claim
Determining the exact scale of the Enoch Cree Nation’s potential claim is a complex and challenging task. Factors such as the amount of oil produced on their land, the fluctuating domestic and global prices, and the changing export tax rates over the decades make it difficult to arrive at a definitive figure.
However, a simplified example illustrates the potential impact: in 1974, the domestic price of oil was $2.20 per barrel, while the global price was at least double that. Additionally, the export tax at the time was around $6.40 per barrel. Even if not all of this tax burden was passed down through reduced royalties, the Enoch Cree Nation would have still faced a significant loss per barrel.
Righting a Historical Wrong
This case is about more than just financial compensation. It raises fundamental questions about respect, autonomy, and the right of First Nations communities to have a say in the management of their land and resources. A successful claim could set a precedent, potentially leading to other First Nations seeking similar redress and prompting a broader reckoning about resource development in Canada.
As the Enoch Cree Nation continues their decades-long fight for justice, the outcome of this case could have far-reaching implications, not just for their community, but for the entire nation.
What was the Oil Export Tax?
The Oil Export Tax was a policy enacted by the Canadian government in 1974 to stabilize rising energy prices for Canadian consumers. This tax was applied to oil exports to the United States and was roughly equivalent to the difference between the fixed domestic oil price in Canada and the higher price of oil in the United States (Chicago Terminal price).
Why were First Nations negatively impacted by this tax?
Although the Oil Export Tax and fixed domestic oil prices significantly impacted First Nations oil royalties, bands did not benefit from any Federal tax repayment or abatement mechanisms. They were also excluded from policy discussions during this period.
Did this situation violate the Indian Act?
Yes, this inequitable treatment was disputed by First Nations and agencies like IOGC as a violation of the Indian Act. It was argued that the tax constituted “indirect taxation” on producers. Additionally, the imposed price fixing on First Nations production was deemed to have questionable legality.
Were there attempts to recover these losses for First Nations?
Yes, from 1974 onwards, First Nations initiated numerous approaches to both the Provincial and Federal governments to address this issue. Several court cases, primarily led by the Hobbema Bands and later the Samson and Ermineskine First Nations, attempted to seek remedy for the lost revenues during the period of 1973-1985, but no known settlements have been reached to date.
What were the key periods for potential claims related to the Oil Export Tax?
While the Oil Export Tax was applicable from 1973 to 1985, there are several potential claim periods:
- October 1, 1973 – May 31, 1985: This period represents the full duration during which First Nations paid the oil export tax on-reserve production to the Federal Government.
- October 1, 1973 – March 31, 1974: This timeframe holds significance as it marks a period when 50% of the collected Oil Export Tax revenues were returned to producing provinces.
- April 1, 1974 – June 30, 1975: This period saw the implementation of the Oil Import Compensation Fund, leading to increased pressure on the Canadian government to mitigate the financial burden on oil importers.
Did the Canadian government attempt to compensate anyone for the Oil Export Tax?
Yes, while First Nations did not receive any reimbursements, there were two known rebates and one payment from a special fund made to Alberta during the period of oil price regulation, totaling $384,525,000. All other proceeds from the export tax were utilized to subsidize oil importers, compensating them for the price differential between US and domestic oil prices.
What were the complexities in calculating the value of potential Oil Export Tax claims?
Calculating the value of these potential claims is complex due to several factors:
- Fluctuating Tax Rates & Regulations: The Oil Export Tax rates and associated regulations were subject to change, particularly after the National Energy Program’s introduction in 1980.
- Data Availability: Consistent reports detailing changes in the tax and regulated oil price are not readily available for all years, particularly during the later years of the program.
- Export Restrictions: The presence of export restrictions further complicates the calculation. These restrictions, often changing, limited the daily barrels allowed for export and impacted the overall revenue generated from the tax.
What areas require further research to fully establish the value of Enoch's potential claims?
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- Natural Gas Impacts: Investigating the impact of regulated natural gas pricing on First Nations, particularly during the 1970s and 1980s, could uncover another potential source of claims.
- Quantifying Export Ratios: Further research is needed to determine accurate export ratios, considering the fluctuating market dynamics and the impact of export restrictions on First Nations’ access to export markets.
- Inclusion of Condensates: It’s necessary to clarify whether liquid condensates were subject to the Oil Export Tax and, if so, to analyze their potential value in the context of these claims.
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Cast of Characters:
- Enoch Cree Nation (ECN): A First Nations community located in Alberta, Canada, with a history dating back to at least the 17th century. They are actively pursuing claims for historical injustices and breaches of trust regarding land and resource management.
- Strongwood Cree: Ancestors of the Enoch Cree Nation who inhabited the area now known as the Enoch Cree Nation reserve since at least 1670.
- Chief Thomas Lapotac: The leader of the Lapotac Band during its formation in 1842 and during the signing of Treaty 6 in 1877. A descendant of the Strongwood Cree.
- Chief Enoch Lapotac: Brother of Chief Thomas Lapotac, who continued his legacy of leadership within the Lapotac Band.
- Government of Canada: The federal government of Canada, responsible for historical and ongoing relationships with First Nations communities, including treaty agreements and land management.
- Crown: A legal term referring to the Canadian government in its capacity as the legal entity representing the Sovereign.
- Indian Minerals West: A government agency, later replaced by IOGC, responsible for managing and regulating resource development on First Nations land.
- Indian Oil and Gas Canada (IOGC): A federal agency created in 1987, responsible for managing oil and gas resources on First Nations reserves. Subject to claims of mismanagement and breaches of trust.
- TransCanada Pipeline Corporation (TCPL): A major pipeline company operating in Canada, involved in agreements with producers on Enoch Cree Nation land and subject to claims related to TOPGAS deductions.
- Maurice Law: A law firm representing the Enoch Cree Nation in their claim regarding the 1902 land surrender.
- Specific Claims Tribunal: An independent body in Canada that adjudicates specific claims made by First Nations against the federal government, often related to breaches of treaty obligations or other historical grievances.
Cast of Characters:
Enoch Cree Nation (ECN):
- Chief Jerome Morin: Chief of ECN during the Buffalo et al v. Canada case.
Canadian Federal Government:
- Pierre Trudeau: Prime Minister of Canada (1968-1979, 1980-1984) who enacted the initial oil price freeze and export tax.
- John Turner: Minister of Finance (1972-1975) who rejected proposals to compensate First Nations for lost oil revenues.
- Jean Chrétien: Minister of Indian and Northern Affairs (1968-1974) who advocated for returning export tax funds to First Nations.
- Judd Buchanan: Minister responsible for Indian and Northern Affairs (1974-1976) who supported First Nations claims if Alberta agreed to participate in a rebate.
- P.B. Lesaux: Assistant Deputy Minister of Indian and Eskimo Affairs who facilitated communication and explored solutions regarding the export tax issue.
Samson Cree Nation:
- Roy Louis: Economic Development Officer for Samson Cree Nation who publicly advocated for the return of export tax funds.
- Robert (Bob) Roddick: Lawyer representing the Hobbema Bands, including Samson Cree Nation, in export tax related matters.
Other:
- Hobbema Bands: A group of four First Nations in Alberta, including Samson Cree Nation, that actively advocated for export tax repayment.
- Syncrude & Suncor: Synthetic oil producers that benefited from government subsidies through the National Energy Program.
- Esso: Oil company granted the ability to sell its production at world oil prices in 1983.
This timeline and cast of characters offer a starting point for understanding the complex events surrounding the Canadian Oil Export Tax and its impact on First Nations. Further research is recommended for a complete picture and to fully assess the potential value of Enoch Cree Nation’s claims.
Timeline of Events:
1973:
- October 1: Canada implements an Oil Export Tax on Alberta oil. The tax is roughly equivalent to the difference between the federally established price of Canadian domestic oil and the Chicago Terminal price.
- September: Prime Minister Pierre Trudeau announces a temporary moratorium on oil price increases and other price control mechanisms to stabilize energy prices for Canadian consumers.
- October 1 – December 1: Export tax rate at $0.40/bbl.
- December: Export tax rate rises to $1.90/bbl.
- October 1 – December 31: All export tax earnings returned to producing provinces as 50% direct payment and 50% investment in provincial energy projects.
1974:
- January – April: Price of oil frozen.
- January: Export tax rises to $2.20/bbl.
- February 1 – March 31: Export tax rises to $6.40/bbl.
- March:A special fund is created, taking the equivalent of $0.25 per barrel from export tax. Alberta receives a total of $144,000,000 under this agreement.
- Policy changes lift the royalty cap for on-reserve oil production.
- April:Petroleum Administration Act replaces the Oil Export Tax Act.
- Export tax drops to $4.00/bbl.
- Minister Chrétien sends a letter to Minister Turner requesting Canada address the First Nations export tax issue, advocating for a return of funds from the 1973-1974 period.
- April – June 30, 1975: Estimated $1.669 billion in federal oil export tax collected.
- June 1: Export tax rises to $5.20/bbl.
- June: A group of Alberta bands is advised by the province that it would distribute a share of the 1974 rebate if the Federal Government acknowledged that First Nations production should not have been subject to the tax.
- 1974+: Various documented First Nations meetings on the export tax issue record a consensus that 100% of all taxes collected should be repaid.
1975:
- February:Hobbema lawyer Robert Roddick sends a letter to Assistant Deputy Minister of Indian and Eskimo Affairs, P.B. Lesaux, indicating Alberta will follow the Federal Government’s lead on the export tax issue.
- Lesaux works with Bands and Minister Chrétien to offer solutions to the 1973-1974 export tax rebate issue to Minister of Finance John Turner, including investing rebate payments in First Nations energy development.
- March 1: Export tax rises to $5.50/bbl.
- April 1 – March 31, 1976: $1.063 billion in federal oil export tax revenues collected.
- April 1 – June 30: Export tax drops to $4.70/bbl.
- May: John Turner rejects multiple suggestions from Lesaux and Chrétien to address export tax inequities, including First Nations participation in the federal rebate programs, acknowledgment that Alberta’s tax calculations should not have included on-reserve production, and additional funding for First Nations energy projects.
- June: Minister Judd Buchanan is advised by Turner that the Federal Government would support the Bands if Alberta agreed to participate in an export tax rebate.
- US State Department correspondence indicates barrels of non-gas liquid condensates are subject to the export tax at the same rate as light and medium crude oil.
- An Alberta minister notes $44 million, or $41 million, of the 50% export tax returned to Alberta was levied on First Nations production and should have been handled separately.
1976:
- April 1 – March 31, 1977: No known federal oil export tax revenues.
- Government export restrictions lower allowable exports of conventional oil to just over 500,000 barrels a day.
1977:
- February 1: Export tax drops to $4.40/bbl.
- April 1 – March 31, 1981: No known federal oil export tax revenues.
- June: A memorandum to the Cabinet advocates for repaying the export tax to First Nations for the initial 6-month period of the Export Tax Act.
- Enoch publicly claims it is owed $1 million in wrongfully charged export taxes.
- Samson Band publicly claims it is collectively owed $9,000,000 in collected export tax from the 1973-1975 period.
1978:
- April 1 – March 31, 1979: $328,000,000 in federal oil export tax revenues.
1979:
- February 28: Edmonton Journal publishes an article covering the lack of government response to previous attempts by First Nations to recover lost oil revenue.
1980:
- April 1 – March 31, 1981: $630,000,000 in federal export tax revenues.
- National Energy Program (NEP) introduces further market controls, including regulating interprovincial natural gas shipments and restricting gas exports to higher-value US markets.
- November 1 – January 31, 1982: Export tax rises to $10.50/bbl.
1981:
- April 1 – March 31, 1982: $435,000,000 in federal export tax revenues.
- October 30: UPI publishes an article on the Petroleum Compensation Charge, noting Syncrude produced 25 million barrels of synthetic crude oil subsidized by the fund.
1982:
- April 1 – March 31, 1983: $305,000,000 in federal export tax revenues.
- November 1 – January 31: Export tax drops to $2.00/bbl.
1983:
- April 1 – March 31, 1984: $210,000,000 in federal export tax revenues.
- Esso sells its production at world price due to government subsidies.
1984:
- Two-tiered pricing system removes price controls from oil developed after 1981. Oil produced before 1981 limited to 75% of the world price.
1985:
- May 31: End of the oil export tax and regulated pricing regime.
1989:
- Samson Indian Band files a claim in Federal Court over Canada’s breach of fiduciary and trust duties and violation of treaty obligations due to the 1973-1985 regulated oil pricing and export tax policies. Claim dismissed based on a six-year statute of limitations.
1992:
- Chief John Ermineskin, on behalf of the Ermineskin Indian Band, files a claim in Federal Court alleging Canada’s 1973-1985 regulated oil pricing regulations constituted a breach of the Crown’s trust and fiduciary duties and infringed on established treaty rights. The claim is dismissed based on a six-year statute of limitations.
2005:
- Buffalo et al v. Canada case, concerning First Nations self-governance and Crown breaches of fiduciary duty towards royalty management involving multiple Hobbema Bands, begins. Chief Jerome Morin of Enoch Cree Nation named as an intervenor. The portion of the case dealing with the oil export tax and regulated pricing regime appears to be constituted from the previous dismissals of Samson and Ermineskin cases.
2015:
- The Federal Court of Appeal upholds the lower court’s dismissal of Ermineskin Indian Band v. Canada based on the six-year statute of limitations.
2016:
- Outcome of Buffalo et al v. Canada.
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