Recent Developments in Resource Revenue Sharing with First Nations
Aboriginal groups across Canada have been advocating for a share of the resource revenue derived from their asserted traditional lands. Historically, the provincial and federal governments have allowed industry and Aboriginal groups to reach their own agreements in respect of projects developed on such lands. In recent times, resource revenue sharing (RRS) has become accepted in principle by a number of governments as another means of addressing Aboriginal concerns, and various RRS proposals are being actively developed.
Introduction to Resource Revenue Sharing
The precise meaning of "resource revenue sharing" is elusive, as its meaning depends on the perspectives of those with an interest in defining it. For example, governments will often have a narrower view of what constitutes "resource revenue" than will other beneficiary stakeholders.
The magnitude of the task in addressing RRS was succinctly summarized in a discussion paper prepared for the Prospectors & Developers Association of Canada in 2006:
Resource revenue sharing is an extraordinarily complex and contentious issue, one which messily intrudes into a broader set of political, constitutional, jurisdictional, economic, and policy considerations. Fiscal relationships, equalization, federal-provincial relations, resource management and ownership, the so-called "fiscal imbalance," interpretation and renovation of historic treaties, modern land claim and treaty processes, self-government, consultation and accommodation, along with a host of governance, program delivery and capacity issues, are but some of the areas affected by any serious discussion on resource revenue sharing.1
Recently, industry and governments have appeared to align their views with Aboriginal groups that RRS, if properly implemented, is in each of such parties’ mutual interest. Several jurisdictions in Canada have attempted to address RRS comprehensively. In this article, we address RRS proposals recently announced by the provincial governments of Ontario, Manitoba and British Columbia.
Ontario does not yet have a formal RRS policy. However, the Ontario Government recently proposed several policies that are intended to affect how RRS is developed and implemented.
On July 14, 2008, Ontario announced a plan known as the "Far North Planning Initiative" (FNPI), to protect roughly half of northern Ontario’s vast tract of Boreal forest. Ontario has committed to protect more than 225,000 square kilometres of northern Boreal lands.
In announcing the FNPI, Ontario made clear its desire to ensure that First Nations and Métis communities share in revenues that stem from permitted development in the protected portions of the Far North, and stated its intention to create a new system to share resource benefits with Aboriginal communities. More particularly, in press releases around the FNPI, Ontario suggested that an RRS policy could include benefits such as: (i) sharing of Crown revenues from natural resources development with Aboriginal communities; (ii) ensuring Aboriginal communities have natural resource allocations; (iii) involving Aboriginal communities in the management of natural resources; and (iv) private sector collaboration and cooperation with Aboriginal communities.
Subsequent to announcing the FNPI, Ontario released its discussion paper, entitled Modernizing Ontario’s Mining Act — Finding a Balance (2008 Discussion Paper), on August 11, 2008 ― concurrently with an announcement that it would review the Ontario Mining Act to ensure resource development benefits Aboriginal communities. The 2008 Discussion Paper outlined five principal areas in which the Mining Act needed to be reformed. Four pertain directly to Aboriginal issues and include: (i) how to develop a mineral tenure system that takes into account Aboriginal community concerns; (ii) Aboriginal rights and interests related to mining development and how to develop a flexible consultation framework; (iii) how to mitigate the impact of early stage exploration activities on Aboriginal communities; and (iv) the mandatory inclusion of new mines in community land use plans (such plans to be developed as part of the FNPI) supported by Aboriginal communities. The 2008 Discussion Paper also served as the basis for consultations with stakeholders and Aboriginal communities on Mining Act reforms. The consultations started in September 2008 and the public comment period ended on January 15, 2009.
Although the 2008 Discussion Paper does not directly address RRS, it appears that Ontario intends to use the Mining Act reforms to fast track the implementation of an RRS policy before concluding the FNPI, which could take up to 15 years to complete. As stated on the Ministry of Aboriginal Affairs’ website, Ontario hopes that "the review will lead to more partnerships between First Nations and mining companies like the Attawapiskat-DeBeers Impact Benefits Agreement."
On the same day the 2008 Discussion Paper was released, the Ontario Mineral Industry Cluster Council (OMICC) presented its recommendations on RRS. The recommendations were derived from the OMICC’s 2006 report, entitled Resource Revenue Sharing Between Government and Aboriginal Communities. Key recommendations in this OMICC report include:
- establishment of a First Nations Trust Fund into which Ontario would contribute $50 million annually, such revenue to come from existing mining tax streams; and
- contribution of one per cent of gross revenue from all new mines to the First Nations Trust Fund.
It remains unclear as to whether Ontario will implement the recommendations put forth by the OMICC, although it should be noted that the OMICC report is the most comprehensive set of public recommendations Ontario has received to date. If Ontario decides to implement the OMICC recommendations, however, it will have to address some key issues, such as:
- Who benefits from a RRS policy – all Aboriginal communities in the province or only those directly affected by mining?
- How is "gross revenues" defined? Does this include the gross revenues of the mining companies or the gross revenues of Ontario? Does it refer to revenue from mineral taxation exclusively, or does it also include indirect benefits such as wages and non-mineral taxes?
- What are the criteria for RRS entitlement, such as a consideration of the impact that mining may have on asserted Aboriginal and treaty rights?
Ontario tabled proposed amendments to the Mining Act at the end of April 2009. If the Mining Act reforms are eventually to include RRS, Ontario must be clear on the purpose of any proposed RRS policy. For example, is RRS to be compensation for infringement of Aboriginal and treaty rights, revenue for the benefit of Aboriginal people, or both? Clear policy objectives will be essential in setting expectations of both the mineral sector and Aboriginal communities, and will dictate the success of an effective RRS regime in Ontario.
Manitoba has not, to date, initiated a province-wide RRS framework. Rather, the RRS planning they are engaged in is specific to the east side of Lake Winnipeg (East Side). The East Side encompasses approximately one-seventh of the entire land mass of Manitoba.
Manitoba’s RRS planning is linked to the broad area planning process it is engaged in with the First Nations and Métis peoples residing on the East Side. This process was launched in July 2000 as the "East Side Planning Initiative" and was subsequently renamed "Wabanong Nakaygum Okimawin." This planning initiative has been implemented with the goal of ensuring the direct involvement of the First Nations in resource planning, resource allocations and sustainable development of the East Side.
On April 3, 2007, Manitoba and certain East Side First Nations entered into the Wabanong Nakaygum Okimawin Council of Chiefs Accord. In signing this Accord, the parties have agreed to work together to implement the recommendations contained in the status report compiled and published by the East Side Planning Initiative, Promises to Keep. This publication made a recommendation that an RRS framework be developed for the East Side in respect of resource removal from traditional lands. It also stated that agreements for land use decisions should include RRS provisions.
Manitoba and the East Side First Nations have not yet published the specifics of the RRS model they plan to employ.
On October 23, 2008, British Columbia announced that it had authorized its provincial negotiators to include RRS with First Nations on new mining projects.
British Columbia has issued few details regarding its model of RRS. What appears to be evident is that the BC model is specific to each new mining project, with the process for RRS decided on a case-by-case basis. There is no set threshold for the amount of revenue to be shared, and no definition of what specifically constitutes "revenue." Factors that British Columbia will consider in determining the amount of revenue to be shared will include the size of the mine, the size of the First Nation, and the economic needs of both the First Nation and the area as a whole. It appears that the revenue to be shared will be from mineral tax revenue collected by British Columbia.
Resolving RRS specifics on a project-by-project basis will allow British Columbia negotiators the flexibility to avoid many of the perceived problems commonly associated with RRS when applied broadly without thought to project specifics. Of course, the real test of the British Columbia proposal will occur with the first new mining project to undergo RRS negotiations.
The various provincial governments’ adoption of RRS policies and models in relation to Aboriginal peoples signals their desire for a greater level of certainty with respect to resource development and other projects. From the perspective of mining companies seeking to develop projects, however, it remains unclear how RRS will factor into broader issues of consultation and accommodation typically associated with such projects ― and how RRS will actually lead to greater certainty for project proponents. For example, the current formulations of RRS policies do not address key issues such as whether the acceptance of RRS by a First Nation will constitute recognition of the sufficiency of the Crown’s consultation efforts or whether it is simply a component of the overall consultation process. Additionally, it is unclear how RRS policies will engage with those procedural aspects of the Crown’s duty to consult, which are typically delegated to project proponents.
The inclusion of RRS policies and models may ultimately provide greater certainty regarding the consultation and accommodation necessary for approving projects. Nevertheless, the details and mechanics of such policies will be key to understanding the impact that RRS will have on the expectations of First Nations and, ultimately, the level of certainty created for developers of mining projects.
1 Cornish, Christopher, Mapping the Road Ahead: Finding Common Ground On Resource Revenue Sharing; discussion paper prepared for the Prospectors & Developers Association of Canada, December 2006.
Kristyn Annis and Rob Miller co-authored this article.
Aboriginal grups Cornish Crown federal governments First Nations FNPI Mapping the Road Ahead Métis mining OMICC private sector Prospectors & Developers Association of Canada resource revenue RSS stakeholders Wabanong Nakaygum Okimawin