FORT ST. JOHN, B.C. — Canada could be on the hook for a 65-year-old mistake.
The Specific Claims Tribunal has found that the federal government botched a land purchase for two northeastern British Columbia First Nations in 1950 when it unknowingly failed to secure the rights to underground oil and gas reserves.
Justice Larry Whalen ruled that Canada failed to act in the best interests of the Doig River and Blueberry River First Nations by neglecting to adequately investigate the title it was acquiring on their behalf.
"A man of ordinary prudence managing his own affairs at the time would have investigated the title of real property he was acquiring," Whalen said in a written decision.
"Canada was very experienced in the disposal and acquisition of land, including reserve land. It ought to have known and taken this very ordinary precaution."
His decision does not give the First Nations rights to the oil and gas, but it does pave the way for compensation. The tribunal can award a maximum of $150 million in any dispute and another hearing will be held to determine whether the bands are entitled to cash.
The case stretches back to 1945, when men returning from the Second World War were in desperate need of land and housing. The two bands — which at the time were just one group called the Fort St. John Beaver Band — agreed to give up their reserve in northeastern B.C.
The Canadian government sold the land, called the Montney Reserve, for distribution to veterans. The sale included the rights to resources below the surface.
The government then bought a replacement reserve for the bands from the province. It mistakenly assumed it had also purchased the rights to any oil and gas found below the land, but in fact B.C. retained those rights.
Canada only learned of its error two years later, in 1952, after it issued mineral exploration permits to a resource development company and B.C. declared them invalid. The province had issued permits to Texaco Exploration Company in 1950.
"I regret the error which led us to attempt to deal with petroleum and natural gas rights, which remain provincial property," a Canadian official wrote to B.C.'s deputy mines minister at the time.
But Canada didn't tell the First Nations, who only learned in 1977 that they didn't have the rights to the fossil fuels beneath their feet.
Whalen acknowledged it is B.C.'s practice to retain all subsurface rights of land it sells. But he wrote that this did not absolve Canada of its obligation to try to correct the error, perhaps by consulting on a sharing arrangement with the bands, looking into whether other lands were available that included subsurface rights or offering compensation.
"It is unnecessary to speculate what might have happened at this point. The fact remains that Canada did nothing to try to rectify the situation," he wrote.
Blueberry River launched a lawsuit after petroleum was discovered on their original land, the Montney Reserve, in the 1970s. The Supreme Court of Canada eventually awarded the band a $147-million settlement for lost revenues.
