Focus: Disclosure of mining payments a hot topic – by Charlotte Santry (Law Times – April 28, 2014)

Move to boost transparency could have negative consequences

Forcing energy companies to disclose payments to aboriginal communities could make treaty negotiations smoother and more transparent, lawyers believe. But some warn it could also encourage the federal government to slash funding for infrastructure and social services in those communities.

Former natural resources minister Joe Oliver told mining executives last month the federal government was upholding its commitment to ensure mining companies disclose payments made to governments at home and abroad.

The plans would cover payments of more than $100,000 made by oil, gas, and mining companies to all levels of government, including aboriginal communities. This would affect payments made by resource companies via legally binding impact benefit agreements. The agreements set out how a community will benefit from land used in operations such as mines.

Julie Abouchar, a partner at Toronto law firm Willms & Shier Environmental Lawyers LLP, says the proposals could benefit negotiations on impact benefit agreements. “A good process involves regular reporting to communities about the progress of negotiation and that the agreement be made available to community members to read before any agreement is ratified,” she says. “This approach is possible and appropriate under current confidentiality rules but may be followed more consistently if the transparency rules were to change.”

Other commentators have argued opening up the talks would help aboriginal organizations where more than one community is participating in negotiations with resource firms by allowing them to work together more effectively.

However, there are also concerns that governments will use the information to cut back on infrastructure spending planned for those areas.

“If transparency results in a net reduction of the basic federal funding for infrastructure and social services, this would be a disincentive for First Nations to invest the time and resources to negotiate benefits and economic development opportunities,” says Abouchar.

Fasken Martineau DuMoulin LLP partner Kevin O’Callaghan says such fears reflect a “serious and real mistrust that the aboriginal community has of the federal and provincial governments” and could well make aboriginal groups “hesitate” to embrace the change.

Applying the transparency rules to aboriginal communities could also increase the complexity of the consultations and thus delay the overall implementation, he adds.

But in a Canadian context, it would be legally troublesome to exclude aboriginal communities from a regime that encompasses governments operating at a subnational level, he notes.

In an article on McCarthy Tétrault LLP’s web site, lawyers Sam Adkins and Stephanie Axmann note another potential disadvantage as the rules could lead to the “financial component of these deals becoming the focal point of negotiations.” Instead of creating certainty and transparency between businesses and aboriginal groups, they argue, “such partial reporting could in fact have the opposite effect.”

Addressing the Prospectors and Developers Association of Canada’s convention in Toronto on March 3, Oliver said the federal government’s preference was to work with the provinces and territories to implement mandatory reporting standards for the extractive sector through securities regulators.

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