The provincial government recently announced that it had reached resource revenue sharing agreements with thirty-two First Nations who are members of (a) Grand Council Treaty #3, (b) Wabun Tribal Council, or (c) Mushkegowuk Council.
Pursuant to each agreement, the participating First Nations collectively will receive 45 per cent of Ontario's annual revenues from forestry stumpage within designated forest management units, and 40 per cent of Ontario’s annual mining tax and royalties from certain mines in commercial production at the time the agreement was signed. If a new mine becomes active, and is added to an agreement, the percentage will increase to 45 per cent. The individual First Nation allocations by mine are stipulated in the agreements.
Resource revenue payments will begin prior to December 31, 2019, for the fiscal year of 2018-2019. Payments will continue for five fiscal years, unless extended by further agreement.
First Nations must spend funds they receive on one or more of the following areas: economic development, community development, cultural development, education, and health. The agreements provide that the monies cannot be used for per capita distributions to First Nation members or any other person, distributed to any Indigenous group outside of Ontario, used to cover the cost of litigation, or invested to preserve or seek a return without advancing the five areas outlined above. Notwithstanding these restrictions, resource revenue sharing may “free up” other First Nation monies. These agreements are not intended to replace existing provincial funding to participating First Nations.
Industry players will want to know how, if at all, these newly-made agreements will impact their projects, and their relationships and commercial agreements with First Nations.
The resource revenue sharing agreements address proponents directly in two ways. First, they provide that such agreements are not intended “to discourage, inhibit, replace or qualify the negotiation of” agreements directly between forestry and mining proponents and participating First Nations.
For projects which are significantly advanced and only involve participating First Nations, a resource revenue agreement may facilitate a more expeditious governmental approval process. For exploration or advanced exploration projects, the resource revenue sharing agreements may complicate engagement issues and the negotiation of agreements with First Nations and other Aboriginal groups throughout the mining cycle. For example, the prospect of future allocation of resource revenue may drive First Nation behaviour from an early stage. The resource revenue sharing agreements also may lead to increased financial demands on proponents by non-participating First Nations.
Secondly, the agreements provide as follows:
Where an “on the ground conflict” or direct action occurs by a Participating First Nation individual or community occurs which is interfering with ongoing mining or forestry activities, Ontario shall approach the Participating First Nation community or communities that are most directly associated with the conflict and invite them to discuss approaches to attempt to resolve the conflict. If such an invitation is extended, the community or communities shall give it due consideration and communicate to Ontario whether or not they agree to hold such discussions, and if so under what constraints, if any.
This term is not likely to provide much practical benefit to proponents. There is no firm commitment from the First Nations to assist, and there is no consequence for not providing assistance. Further, it is not clear whether “ongoing mining activities” will be broadly interpreted to encompass early exploration through commercial production. Proponent negotiated agreements should contain more robust provisions as it relates to blockades or related interference with access to lands or project-related activities.
The approach taken by Ontario is broader than in B.C., where resource revenue sharing for mines is done on a project by project basis, and on a Nation by Nation basis for forestry operations.