Federal proposal for mining, oil and gas companies to disclose payments to Aboriginal governments would affect IBAs

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A new proposed federal policy would obligate companies to “report” some types of Impact Benefits Agreement (IBA) payments to First Nations.  First Nations may wish to consider what this means for the types of IBA benefits packages currently under negotiation with mining, oil and gas and other companies.

Natural Resources Canada (NRCan) recently released a consultation paper on mandatory reporting standards for companies involved in commercial oil, natural gas, and minerals development.   Broadly speaking, the proposed reporting standards impose requirements on publicly listed companies and companies with assets over a certain level to report payments made to governments, including Aboriginal governments.   NRCan proposes that payments over $100,000.00 would have to be reported.

NRCan states that the rationale for reporting these payments is to enhance transparency and to align with other countries’ standards regarding these payments,  although it appears that reporting payments to aboriginal governments is not currently a transparency requirement in the U.S. or Europe.

What will have to be reported

Payments to governments, including Aboriginal governments (which would include not-for-profits and other entities able to enter into Impacts and Benefits Agreements), would be required for the following things:

• taxes levied on the income, production or profits of companies, excluding consumption taxes;
• royalties;
• fees, including licence fees, rental fees, entry fees and other considerations for licences and/or concessions;
• production entitlements (e.g., including payments made in-kind);
• bonuses, such as signature, discovery and production bonuses;
• dividends paid in lieu of production entitlements or royalties (excludes dividends paid to governments as ordinary shareholders); and
• payments for infrastructure improvements (e.g., roads, electricity, etc.).

“Social Payments” are not required to be reported.  These include payments that benefit development of capacity in an Aboriginal community, and payments for things like community centres, schools, hockey teams and arenas. The requirements also do not appear to apply to trusts established for the benefit of First Nations’ citizens.

How will this affect First Nations?

First Nations may have cause to be concerned about the reporting of the payments, for a few reasons. Payments made under IBAs with extractive companies are often compensation for negative impacts to asserted or proven Treaty and Aboriginal rights.  Those negative impacts, and the appropriate compensation for those impacts, are necessarily specific to the project.  Having to disclose these payments could very well result in payments from other projects being taken to be a “standard” by extraction companies, instead of engaging in a project-specific consideration of impacts and appropriate compensation for those impacts.  This could lead to a “race to the bottom” approach for negotiating IBAs where the real and serious impacts on Aboriginal and Treaty rights are ignored in favour of a one-size-fits-all approach to compensation for effects of a project.

Secondly, where payments are compensation for impacts in any other setting, the negotiated amounts are confidential, as they are a settlement of possible or actual litigation about impacts to the project.    There is no apparent rationale for why compensation for impacts on Aboriginal and Treaty rights should be treated any differently.

It is also not clear that the purposes behind the new reporting requirements are met by requiring reporting of payments from industry to Aboriginal governments. First Nations citizens are already entitled to know, through their governments, what agreements are being made and the amounts being paid under IBAs.

The consultation paper is posted here, and comments can be made until May 9, 2014 through the website link.

By Maggie Wente