Mandatory disclosure of payments made to Aboriginal
communities from companies in the oil, gas and mining sectors will
likely soon become a reality. On October 23, 2014, the federal
government tabled the Extractive Sector Transparency Measures
Act as a measure under omnibus Bill C-43. If passed, the Bill
will alter the current practice of confidential negotiated
agreements between resource companies and Aboriginal communities
about exploration and resource extraction in their traditional
territories. The Bill would require extractive companies in Canada
to begin reporting payments made to Aboriginal governments two
years after the legislation comes into force.
The changes in the Bill reflect a commitment made by the federal
government in Britain in June 2013. The move is also supported by
groups such as the Prospectors and Developers Association of Canada
(PDAC), Publish What You Pay Canada and the Revenue Watch
Institute. (See our earlier article on mandatory disclosure of
payments from February 2014.)
The proposed legislation has, however, raised concerns among
First Nations, which question the federal government's failure
to consult them before introducing the Bill.
A summary of key provisions respecting the mandatory reporting
requirements is provided at the end of this article.
Potential Impact of the Legislation
This legislation will likely affect legally binding impact
benefit agreements and memorandums of understanding between
Aboriginal communities and extractive sector companies. These
agreements up until now have been largely confidential. Requiring
disclosure of these agreements could have both positive and
negative impacts. Managing the impact of this legislation will be a
project for all stakeholders during the two-year transition
A serious concern is that making these royalty figures public
could encourage the federal government to reduce funding for
infrastructure and social services in those communities.
The potential for the federal government to rely on private
companies to discharge its funding obligations is troubling.
Financial agreements compensate the First Nation for impacts to
their territories; they do not serve as replacement source of
public infrastructure funding.
A potential benefit from this legislation is that it may level
the playing field among parties who seek to negotiate financial
compensation agreements. Those negotiating may benefit by having
precedent agreements and financial figures available.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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