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Mandatory reporting standards for payments by extractive industry companies

The Government of Canada recently issued a Consultation Paper regarding proposed mandatory reporting standards (the proposed standards) for payments by extractive industry companies to governments, both domestic and foreign, and including Aboriginal entities. [1] The proposed standards are Canada’s implementation of a commitment made at the 2013 G8 Summit [2] and reflect similar initiatives in several other countries, including the US through the Dodd Frank Act and the European Union (EU) through its Transparency and Accounting Directives. [3]

The proposed standards will apply to companies operating or headquartered in Canada that are involved in the commercial development of oil, natural gas, and minerals, whether in Canada or abroad. Companies involved in transportation within Canada are, apparently, not subject to the proposed standards, although the consultation paper is unclear as to how cross-border transportation undertakings are to be dealt with.

The proposed standards will apply not only to publicly listed companies, but also to medium and large private extractive companies operating in Canada. Medium and large private companies are determined as those which meet two of the three following criteria: (1) CA$20 million in assets; (2) CA$40 million in net turnover; and (3) 250 employees.

With respect to joint ownership or subsidiaries, extractive companies operating in Canada will be required to report if they have a controlling interest in any project in Canada or abroad. The proposed standards will adopt the International Financial Reporting Standards (IFRS) definitions of “control”, “joint venture”, and “joint operation”.

Affected companies would have to publish annual reports of payments of $100,000 and over, either cumulatively in one year or on a one-time basis. The reports would have to be made on a project-level basis, and include payments made to all levels of government, both domestically and abroad. Under the proposed standards, the following categories of payments would have to be reported:

  • Taxes levied on income, production or profits of companies, excluding consumption taxes;
  • Royalties;
  • Fees, including license fees, rental fees, entry fees and “other considerations for licenses and/or concessions”;
  • Production entitlements (including payments made in-kind);
  • Bonuses, such as signature, discovery and production bonuses;
  • Dividends paid in lieu of production entitlements or royalties (excluding dividends paid to governments as ordinary shareholders; and
  • Payments for infrastructure improvements (including roads, electricity, etc.).

Consistent with the U.S. and the EU, it is proposed that companies would not be required to report social payments such as for community centres, schools, hockey teams, arenas, capacity development, training and the like.

It is proposed that the disclosures would be posted on company websites, and would be available for free and unrestricted use by the public.

Payments to Aboriginal entities

The proposed standards would also extend to payments made to Canadian Aboriginal entities, including in relation to Impacts and Benefits Agreements. Payments to the following types of Aboriginal entities would be subject to mandatory reporting:

  • Aboriginal organizations or groups with law-making power and/or governance mechanisms related to the extractive sector;
  • provincially or federally incorporated Aboriginal organizations that undertake activities in the extractive sector on behalf of their beneficiaries; and,
  • Aboriginal organizations or groups that are empowered to negotiate legally binding agreements on behalf of their members (this would include Impacts and Benefits Agreements).

Third party verification

Under the proposed standards, reports would have to be assured or verified by a third party, according to recognised accounting standards.

Consultation Period

The Government of Canada has indicated its preference for these rules to be introduced via provincial securities regulators. However, if the provinces do not take the necessary steps in the near future, the Government of Canada has stated its commitment to introducing federal standards, and will begin work over the summer of 2014 to implement legislation by April 2015.

The Government of Canada is inviting feedback from interested parties prior to May 9, 2014. The consultation process builds on government dialogue with various groups that has occurred over the past year. The Resource Revenue Transparency Working Group (the Working Group), comprising the Mining Association of Canada, the Prospectors and Developers Association of Canada, Publish What You Pay – Canada, and the Revenue Watch Institute, issued recommendations in a paper published earlier this year.4 The Working Group’s recommendations include mandatory disclosure of the same information as contained in the proposed standards, but also includes transportation and terminal operations fees. The Working Group has also recommended that such disclosure be imposed through the provincial securities regulators.

Conclusion

In addition to placing an obligation on extractive sector companies to implement or adapt systems and processes to track and record relevant payments to governments, the proposed rules should be assessed in the context of business ethics and anti-corruption compliance policies and controls. Given the short lead-in time for introduction of the rules, companies operating in Canada should start the process of evaluating and implementing the steps they need to take, to avoid being unprepared for the changes to the Canadian regime. For companies with an international presence, compliance efforts in Canada will need to be addressed as part of wider efforts to comply with similar regimes to be introduced in the EU, and proposed for the US.

At Dentons Canada, we are working closely with our global colleagues to monitor developments and provide clients with practical solutions and market-leading compliance strategies.

 

[1] Natural Resources Canada, Establishing Mandatory Reporting Standards for the Extractive Sector – Consultation Paper: Spring 2014, online: Natural Resources Canada http://www.nrcan.gc.ca/publications/15753 [Consultation Paper].

[2] See item 5 of the G8 Lough Erne Declaration, online: http://www.g8.utoronto.ca/summit/2013lougherne/lough-erne-declaration.html.

[3] Consultation Paper, supra.

[4] The Resource Revenue Transparency Working Group, Recommendations on Mandatory Disclosure of Payments from Canadian Mining Companies to Governments, online: http://www.pdac.ca/pdf-viewer?doc=/docs/default-source/publications—papers-and-presentations/working-group-transparency-recommendations-(2014).pdf.

Mandatory reporting standards for payments by extractive industry companies

Adoption of Bill 70, an Act to amend the Mining Act: Amendments relating to Native communities and reactions of those communities

On last December 10th, the National Assembly of Québec adopted Bill 70, An Act to amend the Mining Act (“Bill 70”). The adoption of Bill 70 came in the wake of three aborted attempts to modify Quebec’s mining regime in recent years, most recently the government’s failure, last October, to pass Bill 43, which would have enacted a new mining act (“Bill 43”).

Bill 70 was part of an effort to harmonize the interests of the various mining stakeholders, such as the mining industry itself, the municipal sector, environmental advocacy groups, and aboriginal communities, which all submitted their observations and comments on Bill 43 during the Special consultations and public hearings on Bill 43 (the “Consultations”).

This newsletter will address the specific provisions of Bill 70 that relate to Native communities, and the reactions of those communities to Bill 70’s adoption. For an overview of the changes brought in by Bill 70, we invite you to read the bulletin on that topic published by our Mining Law group.

Changes to the mining regime relating to Native communities.

  • Consultation of Native communities

Like the earlier Bill 14, Bill 43 proposed an amendment to the Mining Act designed to reaffirm the minister’s obligation to consult Native communities separately. During the Consultations, the Native communities argued that this amendment was not specific enough in terms of the government’s consultation obligations and, moreover, that it only reiterated the government’s duty to consult the First Nations.

In response to those representations, Bill 70 introduces a new chapter (Chapter I.1) in the Mining Act, which reiterates that the government must consult the Native communities separately if the circumstances so warrant (new section 2.1). New section 2.2 states that taking into account the rights and interests of Native communities is an integral part of reconciling mining activities with other possible uses of the territory. At this stage however, it is difficult to determine how that taking into account will be translated into action. Bill 70 also stipulates that the Minister of Natural Resources (the “Minister”) must draw up, make public and keep up to date a Native community consultation policy specific to the mining sector (new section 2.3).

  • Disclosure of agreements with Native communities

Bill 43 contained an obligation for lessees and grantees to send the agreements entered into with any community, whether municipal or Native, to the Minister. Thus, under Bill 43, those agreements were made public.

The amendments proposed in Bill 43 were vociferously criticized during the Consultations, not only by the Native communities but also by certain members of the industry, and Bill 70 tones them down. Bill 70 now provides that the information contained in an agreement between the holder of a mining lease or a mining concession and a community sent to the government in accordance with the Act will not be made public. The data can only be used for statistical purposes. The whole is subject to the Act respecting Access to documents held by public bodies and the Protection of personal information (new section 215).

  • Expropriation

Like Bill 43, Bill 70 prohibits holders of mining rights and owners of surface mineral substances from expropriating Native cemeteries (new section 235).

  • Monitoring committee

Bill 70 stipulates that all holders of state mining leases must establish a project monitoring committee to foster local community involvement in the project as whole. Although the lessee chooses the committee members, they must include at least one representative of the municipal sector, one representative of the economic sector, one member of the public and, where applicable, one representative of a Native community consulted by the Government with respect to the project (new section 101.0.3).

Native community reaction to the adoption of Bill 70.

In a press release issued last December 10th, the Assembly of First Nations of Quebec and Labrador (“AFNQL”) promptly publicized its objections to the content of the Mining Act amendments contained in Bill 70, as adopted (1).

The AFNQL’s objections focus on two issues:

  • Consultation of Native communities

First, the AFNQL argues that the consultation measures introduced in new Chapter I.1 of the Mining Actwill be meaningless, because Quebec will still have no control whatsoever over the exploration work with this legislation.”

The AFNQL finds the amendments brought by Bill 70 insufficient , as there is no specific requirement for consultation at the exploration work stage, and it argues that the government, based on the “free mining” principles enshrined in the Act, has in practice taken the position of neither consulting nor accommodating the First Nations at the exploration work stage. The reason for the AFNQL’s position is that the Mining Act does not require claim holders to obtain a permit before carrying out that type of work (2).

To Native communities, such an approach is inconsistent with the mining sector law reforms initiated by the provinces of Newfoundland, Ontario, Alberta and British Columbia and, moreover, breaches the Crown’s constitutional obligations at the exploration work stage, based on the Court of Appeal of Yukon’s decision in Yukon Ross River Dena Council v. Government of Yukon (3).

  • Disclosure of agreements with Native communities

Although the data contained in an agreement will not be made public, the AFNQL still objects to the disclosure of that information to the government. The Grand Council of the Crees has also voiced concerns about that point. The AFNQL’s press release contains the following statement: “Worse still, the new Mining Act even constitutes a major setback in respecting First Nation self-governance, in relation to the status quo of the previous Mining Act. Minister Ouellet insists, in sections 59 and 79, in spite of fierce protests of First Nations in Quebec, on forcing the mining companies to disclose the information contained in the confidential commercial agreements they signed with the First Nations.”

For any others questions about Bill 70, please contact a member of our Mining Law group or our Aboriginal Law group.

1. The Grand Council of the Crees and the Algonquins, among others, have also made their reactions known.

2. See the memorandum filed by the Great Innu Nation in the course of the Consultations.

3. 2012 YKCA 14; leave for permission to appeal denied by the Supreme Court of Canada on September 19, 2013.

Adoption of Bill 70, an Act to amend the Mining Act: Amendments relating to Native communities and reactions of those communities

Proposed Amendments to the Yukon Quartz Mining Act and Placer Mining Act

As a result of the Ross River Dena lawsuit against the Yukon Government with respect to consultation on the granting of rights to miners to conduct work without consulting and accommodating First Nations, the Yukon Court of Appeal has given the Yukon Government until December 27, 2013 to amend its legislation specifically with respect to Class 1 activities. Class 1 activities can include construction of lines, corridors, trenching, clearing for helicopter pads and camps, construction of access roads and use of explosives.

There were four areas of concern identified as part of the proposed amendments and they include, environmental protection and monitoring, consultation with First Nations, security for Class 1 exploration and identification of areas for specific operating conditions.

The objectives for the amendments were to ensure the duty to consult First Nations was met, improved information sharing, enhanced environmental protection and management of multiple resources. In the case of Class 2 to 4 exploration programs, notice to the Chief of Mining Land Use (“CMLU”) is required.

The proposed amendments include notification by the operator prior to the commencement of a Class 1 program so that additional conditions may be placed on the program by the CMLU if there was significant environmental risk.

CMLU would have the authority to do the following:

1. propose mitigation procedures on potential environmental socioeconomic or adverse impacts on treaty rights of First Nations;

2. refuse the program;

3. provide security; and

4. issue a certificate of compliance.

Upon receipt of a notice, the Chief of Mining Land Use would first determine if there was any potential adverse environmental impact to be mitigated and advise potentially affected First Nations. There would be a 25 day notice reply period and then if no notice is received the proponent could undertake its program. There would be a provision with respect to avoiding undue hardship in proceeding with programs. In addition, there would be “identified areas” where additional requirements could be imposed.

The deadline for review process is July 31, 2013 for comments.

The discussion paper is available on the Yukon website at www.emr.gov.yk.ca/mining.

Comments:

A principal concern with this legislation will be the capacity of First Nations to have a good understanding of the program and its impact on their traditional territories and what responses are appropriate.

One concern will be that the 25‑day period is unlikely to be met and therefore proponents should be prepared to file their possible exploration programs as early as possible in order to address time delays.

An further concern is that a program can be refused if the environmental or socioeconomic effects cannot be mitigated or that treaty rights are “asserted” if aboriginal rights cannot be eliminated or accommodated. What procedures will be in place to address this problem?

One potential solution in this proposal is to perhaps bring in a definition like that in Section 10 of the Mines Act in British Columbia which requires notice when there is a mechanical disturbance. This would still allow general prospecting geochemical and geophysical exploration to take place.

Proposed Amendments to the Yukon Quartz Mining Act and Placer Mining Act

The Government of Québec imposes a temporary moratorium on uranium exploration and development

On March 28th, Québec Environment minister Yves-François Blanchet announced that the Bureau d’audiences publiques sur l’environnement (BAPE) will hold public hearings on the uranium sector in Québec. These hearings are scheduled for the Fall of 2013 and will focus on the environmental and social impacts of exploration and mining of uranium in Québec. The Minister also indicated that no authorization certificates for uranium exploration or mining projects in Québec will be issued until the BAPE’s independent study is completed and its report is issued.

The Minister stressed the importance for the Government to respect the principles relating to the protection of the social environment and the protection of Aboriginal peoples, their societies, their communities and their economy. Aboriginal organizations will therefore be invited to play a significant role in the consultation. The Minister indicated that the BAPE’s study will be conducted in collaboration with the review committees and advisory committees provided for in the James Bay and Northern Québec Agreement, the Northeastern Québec Agreement and the Environment Quality Act.

The Government’s press release is available here (in French only): http://www.mddefp.gouv.qc.ca/infuseur/communique.asp?no=2383

This article was written by Ann Bigué and Dominique Quirk.

The Government of Québec imposes a temporary moratorium on uranium exploration and development

Ontario’s Mining Act: New Rules Take Effect

On November 1, 2012, new rules and changes to existing rules came into effect under the Mining Act in Ontario.

The Mining Act was originally enacted in the 19th century and has remained relatively unchanged since. Several key changes to the Mining Act were enacted in 2009 when the Mining Amendment Act, 2009 was passed.

The changes are geared towards exploration companies and focus on early consultation with Aboriginal communities. The changes have not been without controversy as many in the mining industry see the additional requirements under the Mining Amendment Act, 2009 as costly and time-consuming, and ultimately, as a hindrance to investment in Ontario.

The new rules are:

1. Anyone wishing to apply or renew a prospector’s license must complete the Mining Act Awareness Program.

2. Land may be withdrawn from prospecting or staking, or have its mining rights or surface rights withdrawn if it is a site of Aboriginal cultural significance.

3. An Exploration Plan must be submitted before certain early exploration activities are performed. Compliance with this requirement is voluntary from November 1, 2012 and mandatory from April 1, 2013.

4. An Exploration Permit must be obtained from the Ministry of Northern Development and Mines before certain early exploration activities are performed. Compliance with this requirement is voluntary from November 1, 2012 and mandatory from April 1, 2013.

Changes to existing rules regarding voluntary rehabilitation of existing mines, GPS georeferencing data on ground staked mining claims, assessment work credits, the amount of material that will be considered a bulk sample, and Aboriginal consultation on a mine closure plan have also come into effect.

For more details, please refer to the Ministry of Northern Development and Mines’ website, which can be found here.

Ontario’s Mining Act: New Rules Take Effect

The New Fisheries Act: What Miners Need to Know

 This article was prepared by David Hunter, Nalin Sahni and George McKibbon (McKibbon Wakefield Inc.)

The repeal and enactment of the Canadian Environmental Assessment Act (“CEAA”) and amendments to other federal legislation is the most significant change in federal environmental assessment (EA) since the legislation was enacted. The amendments are aimed at increasing investment in extractive industries by encouraging certainty, reducing regulatory duplication and reducing delays. The implications of these changes are vast and it is too early to determine their impacts on the mining industry.

This is the fourth article in our series on changes to the federal environmental assessment regime and what that means for mining in Ontario. Our first article provided a general overview while our second article addressed changes in CEAA related to Aboriginal consultation. Our third article discussed what the new Aboriginal consultation regime meant for mining in Ontario. In this article we discuss the Fisheries Act amendments, their implications for Aboriginal consultation and other matters relevant to miners taking into account further Fisheries Act revisions proposed in Bill C-45.

Prior to the recent amendments, the Fisheries Act was a powerful environmental and resource management tool of general application. It was applied with force to protected fish habitat across the country. The changes to the Fisheries Act enacted last year and the proposed revisions in Bill C-45 limit the focus from the protection of almost all fish habitat to only the protection of “fish that are part of a commercial, recreational or Aboriginal fishery, or to fish that support that fishery”. The Fisheries Act will apply less often and in more narrow circumstances. It is no longer a statute of general application across Canada but one that will apply only to a limited number of lakes and rivers in limited parts of Canada.

The transition to the new Fisheries Act will occur in two phases. The first amendments to the Fisheries Act were made this past summer. Some of these amendments are placeholders enabling Federal-Provincial negotiations on agreements and protocols and the drafting of new regulations and definitions critical to implementation.

For example, Bill C-38 included two amendments each to Sections 35 and 37 of the Fisheries Act. The first set of amendments that came into force this past summer, maintain the emphasis on protecting almost all fish habitat by expanding the prohibition from only “works and undertakings” that damage fish habitat to include all activities that damage fish habitat as well. The second set of revisions limits the application of the Fisheries Act to only commercial, recreational and aboriginal fisheries or fish that support these fisheries. The second set of revisions will come in to force on a date ordered by federal cabinet, presumably when Federal-Provincial negotiations for new agreements and protocols are complete.

While waiting for the changes from federal cabinet, does nothing change in the interim? No, the place holding amendments diminish the current administrative restrictions and override existing protocols on habitat protection by providing for greater administrative discretion. Staffing and administrative resource cuts underscore the effects of these changes. Even though federal cabined has not approved the second set of amendments, Fisheries and Oceans Canada is processing application as if the legislative changes were in force.

While many of the changes to the Fisheries Act were intended to facilitate mining development, they may not have their intended purpose, at least in the short term. Uncertainty as to the Fisheries Act’s application to mining projects may prevail for some time. Fisheries Act implementation has historically involved the participation of Provincial ministries and agencies to shape implementation agreements and develop an accepted scientific body of practice that defined the measures taken to ensure compliance with the habitat protection provisions.

The refocused Fisheries Act requires development of a new scientific body of practice to implement the more limited habitat protection focus. This will take time and much judgment and consultation will be required, particularly where Aboriginal fisheries are concerned. With staffing and budget reductions, especially among scientists, the resources needed to implement the changes effectively may not be there.

For mining projects, there may be three major impacts. Over larger areas, approvals may become quicker and less expensive to obtain. Projects with existing Fisheries Act approvals will be able to apply to have their permit requirements reduced in accordance with the new Act. However, for projects caught by the new approvals requirements, there may be additional uncertainty as the new science and body of practice are developed.

It may take years to implement the new Fisheries Act and re-establish the science and administrative practices needed for competent implementation. The withdrawal of federal protection for most fisheries could in theory be replaced by additional provincial oversight but this is unlikely to happen in Ontario given the budgetary problems and expected staffing reductions at the Ministry of Natural Resources. But the messaging is clear. The Fisheries Act won’t be the powerful decision-making tool it was in the past.

The New Fisheries Act: What Miners Need to Know

Aboriginal Title Revisited – William V. British Columbia

The decision of the British Columbia Court of Appeal (BCCA) in William v. British Columbia issued June 27, 2012, is the most recent pronouncement on Aboriginal title. The decision goes to the heart of Aboriginal title and rights, and will have important implications for Aboriginal groups, government and project proponents who are undertaking development in areas where Aboriginal title is claimed.

To date, there have been few cases that have considered the scope of Aboriginal title. Claims to Aboriginal title generally arise where the Aboriginal group has not surrendered or ceded its interest in the relevant lands. This particular decision provides further clarification on specifically what constitutes “occupation” for the purpose of proving Aboriginal title.

To read the full article, please click here.

Aboriginal Title Revisited – William V. British Columbia

A New Paradigm for Aboriginal Consultation in Ontario: What Miners Need to Know

This article was prepared by David Hunter, Nalin Sahni and George McKibbon (McKibbon Wakefield Inc.)

The repeal and re-enactment of the Canadian Environmental Assessment Act (“CEAA”) and amendments to other federal environmental legislation amounts to the most significant change in federal environmental assessment (“EA”) since the legislation was first created decades ago. These amendments are clearly aimed at increasing investment in extractive industries by encouraging certainty, reducing regulatory duplication and shortening delays. The implications of these changes are vast and their full impact on the mining industry is not known.

This is the third article in our series on the changes to the federal environmental assessment regime and what that means for mining in Ontario. Our first article provided a general overview of the changes and our second article discussed changes in CEAA related to Aboriginal consultation. In this article, we discuss how the new CEAA will interact with several changes to Ontario mining legislation to create a new Aboriginal consultation regime in Ontario.

Since the amendment of the Constitution in 1982 to include recognition of Aboriginal and Treaty rights, Canadian governments have been engaged in a process of reforming laws and policies to recognize these new rights. To prevent conflicts with Aboriginal peoples, the 2007 Ipperwash inquiry identified the regulation and development of natural resources on Aboriginal lands as a key area of reform. Justice Linden concluded that the

management of natural resources must take into account the rights and interests of Aboriginal people more effectively. I believe there are ways of sharing and co-managing natural resources that are consistent with Aboriginal and treaty rights while serving the interests of first nations and the people of Ontario¹.

It is against this backdrop that Ontario has announced new changes to facilitate Aboriginal consultation for mining in Ontario. As described below, the new regulations proposed under Ontario’s Mining Act and the Far North Act amount to a new paradigm for mining and Aboriginal consultation in Ontario. We hope that the requirements for consultation in Ontario will also satisfy CEAA requirements but this is far from certain.

Changes to Ontario’s Mining Act and Regulations
The purpose clause of the Mining Act has been amended. Mineral resources must now be developed in a manner consistent with the recognition and affirmation of existing Treaty and Aboriginal rights including the duty to consult. This change in purpose has led to a new regulatory scheme that is expected to include detailed consultation requirements at each stage in the mine development process from early exploration to mine closure.

Under the proposed regulations, Aboriginal peoples must be notified when mining claims are recorded within their traditional use areas. Exploration plans are required for low impact activities (e.g. surveys that require a power generator) and exploration permits are required for moderate impact activities (e.g. drilling with equipment over 150 kg). For both exploration plans and permits, miners must notify / consult with Aboriginal peoples. Aboriginal peoples will have the ability to make their concerns and objections known at the start of the mining process. While this is likely to reduce conflicts, it could greatly lengthen the mine development process. Further, sites of Aboriginal cultural significance have been withdrawn from claim staking.

The proposed exploration planning and permitting requirements in the Mining Act are not expected to directly interact with the changes to CEAA, a since they operate at different stages in the mine development process. However, Aboriginal consultation requirements for mine production and closure plans could significantly overlap with the Aboriginal consultation requirements under the new CEAA. At present it is unclear if consultation under the Mining Act will count as consultation under the new CEAA regime or if additional consultations will be required. If these two requirements are not harmonized it could lengthen the environmental assessment and Aboriginal consultation process.

The New Far North Act
The Far North Act is essentially a land use planning statute for the northern-most 42% of Ontario. This huge area is home to 24,000 people, 90% of whom are Aboriginal. While half of the 450,000 km2 in the far north must be an interconnected protected area, one of the most important pieces of information for miners is that mines cannot be opened until community-based land use plans are developed for each region in the far north.

The land use planning process must be initiated by Aboriginal peoples in each area and the final plan must be approved by not only the Ontario government but each of the participating First Nation bands in the area. So far, only four land use plans have been developed in the far north and it could be a long-time before a significant portion of the far north is open to mining. The policies used to develop additional land use plans under the Far North Act will strongly influence whether these plans satisfy some or all of the EA and Aboriginal consultation requirements under the new CEAA.

South of the Far North Act area, Crown land use plans may be prepared under s. 12 of the Public Lands Act. Where approved plans exist, activities carried out in the planning area must be consistent with the approved plan. At present, Crown Land Use Planning Guidelines are for the most part silent on addressing mining or the concerns of Aboriginal peoples and do not assess impacts on Aboriginal peoples or the natural environment as required by CEAA.

A New Aboriginal Consultation Paradigm
Between the changes to CEAA, the new Mining Act purpose clause and regulations and the Far North Act, Aboriginal law is now firmly embedded in the mine development process from start to finish. There are now regulatory and Aboriginal consultation requirements for miners in Ontario starting with early exploration plans and ending with mine closure plans. Aboriginal participation and cooperation is now a core part of the CEAA environmental assessment process (see our second article). These changes, taken together, are beginning to operationalize the Aboriginal provisions of the Constitution and give some sense of what these rights mean in practice.

However, many questions remain unanswered. With all of these new Aboriginal consultation requirements at both the federal and provincial levels, it is unclear if there will be sufficient coordination (or harmonization) between the Ontario and the Federal government to make this Aboriginal consultation regime work in practice. Aboriginal consultation at the provincial level must be accepted to meet federal requirements and vice versa. Federal-provincial harmonization of environmental assessments (including Aboriginal consultation) was a key recommendation of the Drummond Report (see our March 2012 article) but it has not yet been implemented into practice.

At a minimum, coordination between federal and provincial governments should include:

  • The sharing and acceptance of information between federal and provincial authorities (including Aboriginal consultation information);
  • Allowing federal and provincial regulatory processes to run concurrently and
  • Timely review by both levels of government.

Otherwise, the new Aboriginal consultation regime will create significant delays for miners and we suspect that governments may be forced to use the highly controversial cabinet override provisions contained in each of the these statues to ensure that projects are not cancelled because of endless delays.

___________________

¹  Linden, Sidney B. Report of the Ipperwash Inquiry. Toronto: Published by Ministry of the Attorney General, Queen’s Printer for Ontario, 2007 at Volume 2, page 44.

A New Paradigm for Aboriginal Consultation in Ontario: What Miners Need to Know

Canada’s New Environmental Assessment and Aboriginal Consultation Regime: What Miners Need to Know

 This article was prepared by David Hunter, Nalin Sahni and George McKibbon (McKibbon Wakefield Inc.)

The federal government has proposed a complete overhaul of federal environmental assessment in Canada as part of the federal budget. The repeal and re-enactment of the Canadian Environmental Assessment Act (“CEAA”) and amendments to other federal environmental legislation amounts to the most significant change in federal environmental assessment (“EA”) since the legislation was first created decades ago.

These amendments are clearly aimed at increasing investment in extractive industries by encouraging certainty, reducing regulatory duplication and shortening delays. The implications of these changes are vast and their full impact on the mining industry is not known. This is especially true in Ontario where miners will also have to deal with significant changes in aboriginal consultation under the Mining Act and the Far North Act as well as a new provincial Mining Class Environmental Assessment regime.

This is the second article in our series on the proposed changes to the federal environmental assessment regime and what that means for mining in Ontario. In our first article we provided a general overview of the changes. In this article we will discuss changes related to Aboriginal consultation. Future articles will deal with subjects including public participation, broad changes to the Fisheries Act, and harmonization with provincial environmental assessment processes.

While the proposed amendments to CEAA point to a reduced role for the federal government in assessing the environmental impacts from mines, the same cannot be said for Aboriginal consultation. The new CEAA strongly promotes Aboriginal involvement in the environmental assessment process through increased communication and co-operation and requires that environmental assessments address a range of effects on Aboriginal peoples.

Assessing Impacts on Aboriginal Peoples
CEAA continues to promote communication and cooperation with Aboriginal peoples as one of the enumerated purposes of environmental assessments. However, this purpose is given new force by an expanded list of environmental effects on Aboriginal peoples that must be taken into account.

The current CEAA requires the consideration of the impact of any change on “the current use of lands and resources for traditional purposes by Aboriginal Peoples.”¹  The proposed amendments to CEAA maintain this obligation but s. 5.1 also requires the consideration any effect in Canada on Aboriginal peoples’:

• health and socio-economic conditions;
• physical and cultural heritage; and
• structures of historical, archaeological, paleontological or architectural significance.

While each of these environmental effects is included in the current version of CEAA, assessment of their impact on Aboriginal peoples was not as explicitly required as under the proposed amendments. Community and Aboriginal traditional knowledge can also be taken into account in assessing environmental impacts. Unlike other classes of environmental effects, impacts on Aboriginal peoples are not limited to federal government land or jurisdiction. These broadly defined categories appear to apply to environmental effects throughout Canada and their precise definition will likely be the subject of litigation.

Interaction with Ontario Statutes
While these environmental effects on Aboriginal peoples must now be taken into account, a bigger question is how these requirements will interact with the new Ontario Aboriginal consultation regime. The Ministry of Northern Development and Mines is in the process of finalizing new regulations under the Mining Act that would require Aboriginal consultation for mining exploration and prospecting. The Far North Act also prohibits mining development in Ontario’s far north until community-based land use plans are developed. The content of many of these land use plans and whether they would satisfy some or all of the environmental assessment and Aboriginal consultation requirements under the new CEAA remains an open question.

Coordination between the federal and provincial governments is essential for the development of Mining in Ontario. At a minimum, this coordination (or harmonization) should include: the sharing and acceptance of information between federal and provincial authorities; allowing federal and provincial regulatory processes to run concurrently; and timely review by governments at both levels. The FMC Mining Group will prepare commentary entirely devoted to how the proposed amendments to CEAA interact with the new requirements in Ontario.

¹  Canadian Environmental Assessment Act, S.C. 1992, c.37 at s.2(1).

Canada’s New Environmental Assessment and Aboriginal Consultation Regime: What Miners Need to Know

MNDM RFP for Aboriginal Workshops on Mining Act Mineral Exploration

This article was written by David Hunter and Nalin Sahni.

In December 2011, the Ministry of Northern Development and Mines (“MNDM”) issued a Request for Proposals (“RFP”) for the delivery of new Aboriginal education program on mineral exploration and development.

It would be expected that this education program would cover the important new Mining Act regulations on Aboriginal consultation and the licensing of exploration activities that are scheduled to come in to force in 2012 (see Jan. 12th post regarding the Wahgoshig First Nation decision). These regulations are necessary to establish the foundation for mining development and to hopefully avoid conflicts between Aboriginal communities and mining companies as occurred between the Wahgoshig First Nation and Solid Gold Resource Corp. The regulations must help clarify the relationship between the Mining Act and Far North Act that prohibits mining activities in Ontario’s far north until community plans are developed.

However, the content of the workshops appears to be more of an introduction to the mining industry in Ontario with topics such as “Minerals in Your Life.” This seems to be a missed opportunity to solicit Aboriginal views on the adequacy of the new prospecting and exploration regulations. Given the timelines, another more substantive consultation is not likely to occur until the regulations are in force.

MNDM RFP for Aboriginal Workshops on Mining Act Mineral Exploration

Ontario Court Halts Exploration After Mining Company Refused to Consult First Nation

This article was written by David Hunter and Nalin Sahni.

The Wahgoshig First Nation (“WFN”) in Northern Ontario has obtained an injunction to temporarily stop Solid Gold Resources Corp. (“Solid Gold”), a junior mining company, from drilling on their First Nation Treaty lands. In a decision released last week (2011 ONSC 7708 (CanLII)), Justice Brown of the Ontario Superior Court halted all exploration activities for at least 120 days after finding that Solid Gold had repeatedly failed to respond to consultation requests from both WFN and the Ontario Government.

While this decision should not come as a surprise to knowledgeable observers, it is important for three reasons:

1. It confirms that as yet there is no Aboriginal veto over mining exploration activities;
2. It highlights problems with the Crown’s practice of delegating the consultation to proponents and
3. It reiterates that the “free entry” mining system in Ontario is limited by Aboriginal consultation.

Companies that are not mindful of Aboriginal concerns will see their business plans delayed or cancelled.

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Ontario Court Halts Exploration After Mining Company Refused to Consult First Nation