understanding the new BC resource revenue sharing policy with First Nations

Transcription

1 understanding the new BC resource revenue sharing policy with First Nations Keith E. Clark June 2009 McMillan LLP Vancouver Calgary Toronto Ottawa Montréal Hong Kong mcmillan.ca

2 INDEX WHAT IS IT?...1 WHY IS THE BC GOVERNMENT DOING THIS AND HOW DOES IT FIT INTO THE NEW RELATIONSHIP?...5 THE NEW RELATIONSHIP...5 THE TRANSFORMATIVE CHANGE ACCORD...6 WHAT PROJECTS WILL IT APPLY TO?...7 WHO IS DOING THE NEGOTIATIONS FOR THE PROVINCE?...8 WHICH FIRST NATIONS WILL BE ENTITLED TO REVENUE SHARING?...8 HOW MUCH MONEY IS AVAILABLE FOR REVENUE SHARING? WHAT FACTORS WILL DETERMINE THE AMOUNT OF THE REVENUE SHARING? HOW DOES THIS POLICY RELATE TO THE DUTIES OF CONSULTATION AND ACCOMMODATION? HOW DOES THE POLICY RELATE TO IBAS? ARE THERE OTHER POLICIES PROVIDING FOR RESOURCE REVENUE SHARING? WILL THIS POLICY BE APPLIED TO PROJECTS OTHER THAN MAJOR METAL MINES?. 19 METAL MINING MINING INDUSTRIAL MINERALS COAL MINING OIL AND GAS FORESTRY ALTERNATE ENERGY: RUN OF RIVER AND WIND PROJECTS CONCLUSION APPENDIX A NEWS RELEASE OCTOBER 23, APPENDIX B NEW RELATIONSHIP DOCUMENT APPENDIX C TRANSFORMATIVE CHANGE ACCORD NOVEMBER APPENDIX D FIRST NATIONS CONSULTATIVE BOUNDARIES MAP APPENDIX E INDIGENOUS NATIONS TERRITORIAL BOUNDARIES MAP APPENDIX F MINERAL TAX ACT, SECTION APPENDIX G BENEFIT SHARING AGREEMENTS IN BRITISH COLUMBIA

3 UNDERSTANDING THE NEW BC RESOURCE REVENUE SHARING POLICY WITH FIRST NATIONS This paper reflects the writer s understanding of the recently announced BC Resource Revenue Sharing Policy (the Policy ). It is based on the information that is publicly available, discussions with various interested and knowledgeable people about the Policy (including a number of people within the Provincial Government), and considerable speculation. The Policy is still evolving. At the time of writing this paper (June 2009) a number of discussions are taking place between the Province and various aboriginal groups in pursuance of the Policy, but the Policy had not been implemented to the point of actually resulting in any resource revenue sharing agreements. WHAT IS IT? The Policy will provide a process where one or more aboriginal groups will receive a negotiated share of the Mineral Tax revenue from certain new mining projects. The Policy was first publicly introduced on October 23, 2008 by way of a short news release (see Appendix A)1: This news release is the only formal written direction that the Province has given concerning this Policy

4 The key elements of the Policy from the news release are: The Policy is unique - BC is the first province in Canada to share direct revenue generated from mining The process for development of revenue sharing will be developed on a projectby-project basis The focus will be on community development to assist First Nations in achieving their social and economic goals There is a link to the New Relationship, since revenue sharing is a key element of the New Relationship The revenue sharing approach will apply to proposed mining projects resulting in a new stream of direct resource revenue to the Province The revenue stream to First Nations will continue throughout the life of the project Aboriginal leaders requested this revenue sharing policy, and there will be further discussions with the First Nations Leadership Council There is a recognition that the mining industry has been clear that First Nations need to be included in the revenue stream

5 The Province intends to work with industry and First Nations to develop profitable and environmentally sensitive projects for the benefit of all British Columbians The Province is building a new relationship with First Nations founded on mutual respect, recognition and reconciliation, which will support Aboriginal people s participation in the province s economic and social progress In March of 2009 a representative of the Government delivered an outline of the Policy in a presentation at a conference entitled Mining in Aboriginal Communities. That presentation added some additional guidance to the Policy including: There is a wish to minimize litigation, and to de-emphasize the legalistic aspects This will focus on community development he concept of Economic Community Development Agreements is introduced The focus is on the revenue that flows from an interest in the land itself here is a clarification that the Policy will apply to major expansions as well as new projects

6 There is an outline of the proposed process, that starts with a Government negotiator entering into a negotiated arrangement with the First Nation, followed by approval by the Government The factors that would be considered in implementing the Policy in a particular case include the economic impact of the project, the strength of claim and number of First Nations claiming the area, the population of the First Nation(s), the future development potential of the area, the degree of impact, and the proponent benefits to the First Nation(s) It is clear that the intention of the Policy is that revenue sharing will not based on a simple, or even a complicated, formula. Rather, the Policy contemplates a very significant amount of discretion to be exercised in implementing revenue sharing in each case, with many factors and objectives being taken into account in a negotiation process to determine what the revenue sharing might be in any particular instance

7 WHY IS THE BC GOVERNMENT DOING THIS AND HOW DOES IT FIT INTO THE NEW RELATIONSHIP? The New Relationship Resource revenue sharing was a significant part of the New Relationship document. The New Relationship document2 (see Appendix B) was developed in about March of 2005, following the Supreme Court of Canada decision in Haida (November 2004) and just before the May, 2005 provincial election. It was never signed, nor was it intended to be signed. It has been described by the Government as a vision statement3, although it may be the most important statement of provincial policy in the area of aboriginal relations this decade. The New Relationship document refers several times to revenue sharing. The Government s rationale for revenue sharing in the New Relationship appears to have been grounded more on affirmative action rather than a clear statement of Crown recognition of aboriginal rights and title to the resources of the province. In particular, in the portion of the document describing the Goals, the Government s rationale for revenue sharing is linked to its wish to achieve certain strategic goals, which have to do with making BC a better and healthier place to live and work. However, there is a recognition that those strategic goals can only be achieved by closing the economic, health, education and housing gaps that exist between the aboriginal and non-aboriginal

8 people, and one of the ways to close those gaps is to provide for shared benefits that support First Nations as distinct and healthy communities. Included in the Principles to Guide the New Relationship is mutually acceptable arrangements for sharing benefits, including resource revenue sharing. Finally, the Action Plans in the New Relationship document include an intention to: Develop new institutions or structures to negotiate Government-toGovernment Agreements for shared decision-making regarding land use planning, management, tenuring and resource revenue and benefit sharing. In summary, in the New Relationship document the Province indicated that one of the ways that it intended to close the gaps between aboriginal and non-aboriginal people was through a policy of resource revenue sharing which would provide special economic benefits to aboriginal people, without ever clearly admitting any entitlement to such special economic benefits by First Nations based on aboriginal rights and title. The Transformative Change Accord The Transformative Change Accord4 (see Appendix C) also appears to have influenced the Policy

9 This was signed on November 25, 2005 by the Government of British Columbia, the Government of Canada, and the First Nations Leadership Council Representing the First Nations of British Columbia (the latter consisting of the same three aboriginal organizations that had negotiated the language of the New Relationship document). The purposes of the Transformative Change Accord were to5: close the social and economic gap between First Nations and other British Columbians, and reconcile aboriginal rights and title with those of the Crown, and establish a new relationship based on mutual respect and recognition. WHAT PROJECTS WILL IT APPLY TO? The Policy will apply to new major mining projects, and major expansions of existing projects. The Mining Association of BC has a very good interactive website6 that identifies all of the existing and potential mining activity in the province, broken down into metal, coal and industrial mineral mines, as well as operating or proposed mines. It is interesting to note how few mines there are in the province, and how few major mining projects are proposed at this time. As of August 2008, there were 11 metal mines in the province. Although the site notes that there are 17 metal mines that are proposed,

10 history suggests that it is unlikely that more than a few will actually proceed in the next 5 years. In order to develop the Policy, the Government has selected 4 of the 17 proposed metal mining projects as pilot projects in which it is seeking to negotiate revenue sharing agreements. The negotiations with the aboriginal groups related to these projects started in the spring of 2009, and the results of those negotiations are expected to be very helpful in determining how the Policy will actually unfold. WHO IS DOING THE NEGOTIATIONS FOR THE PROVINCE? So far, the negotiations are being conducted with assistance of special negotiators from the First Nations Initiatives Division, an organization within the Integrated Land Management Bureau. The efforts of those negotiators are being coordinated with the Aboriginal Relations Branch within the Ministry of Energy Mines and Petroleum Resources. WHICH FIRST NATIONS WILL BE ENTITLED TO REVENUE SHARING? The First Nations that will be participating in revenue sharing will be some, but not necessary all, of the First Nations who would be consulted with in connection with the particular project. The question of what is actually required to be entitled to receive a share of the revenues is something that can be expected to be refined over time

11 The Government has indicated that one of the factors that will be considered in determining who will be entitled to participate, and to what extent, is the strength of claim and the number of First Nations claiming the area. The unresolved issues in BC around aboriginal rights and title can be expected to be a major challenge for the implementation of any revenue sharing policy based on aboriginal rights and title. Although it is clear that aboriginal title has never been extinguished in the province, it is not at all clear who has it, or where it will be found to exist. There is still not a single case that has established aboriginal title to any specific land in BC. There are very few treaties in BC and the BC Treaty Process is proving to be an extremely slow process of land settlement. There are approximately 200 aboriginal groups in the Province. For all of the aboriginal groups that have not entered into a treaty (and for some who have) there is a fundamental unresolved question of who as between the Province and the aboriginal group owns the land and resources in the territories claimed by that aboriginal group. This makes any resource revenue sharing arrangement very problematic to the extent that it is to be based on an interest in the resource founded primarily on the strength of claim to aboriginal title. Another related problem is overlapping claims. The extent of overlapping claims in the province is enormous. Until 2005 the Government maintained a map available to the

12 public showing the consultation boundaries of most of the various aboriginal groups in the province (see Appendix D). The map disclosed the consultation area of each of the aboriginal groups, indicating the area which each aboriginal groups asserted it had a right to be consulted before a project in that identified area should be approved. A quick view of that map makes it clear how challenging a policy of resource revenue sharing would be if entitlement was to be based solely on who is the proper rights holder. Even if the Government was prepared to accept that the area occupied by a particular mining project was subject to aboriginal title, in most locations in the province there would still be a competition between two or more aboriginal groups as to who would have the entitlement to any financial benefit that flowed from being the proper title holder. One of the objectives of the recent Government initiative concerning the proposed Recognition and Reconciliation Act appears to be to address this problem by proposing the consolidation of the approximately 200 aboriginal groups into approximately 30 Indigenous Nations (see Appendix E), but that is clearly a long term goal. The approach that the Province has taken in the Policy is to make strength of claim to aboriginal rights and title only one factor, rather than a precondition, to revenue sharing. An interesting aspect of the Policy is that to date the Government has placed a strong emphasis on the statements in the New Relationship document and the Transformative Change Accord relating to the wish to close the gaps between aboriginal and nonaboriginal people, while de-emphasizing the importance of determining the proper rights holder

13 This approach may be particularly helpful in the event of overlapping claims, since it provides a basis for the Government, in furtherance of its policies under these documents, to focus on the objective of closing the social and economic gaps between First Nations and other British Columbians without having to make a conclusion on the strongest, or even the exact nature of, the aboriginal claims that are being asserted. HOW MUCH MONEY IS AVAILABLE FOR REVENUE SHARING? The Government representative who outlined the Policy in the spring indicated that the focus is on revenue that flows from an interest in the land itself. It appears clear from other conversations with Government representatives that the source of the funding for resource revenue sharing will be from the money payable to the Crown under the Mineral Tax Act. The same Government representatives have also made it very clear that there will be no source of funds for resource revenue sharing payments other than these tax revenues. The tax payable under the Mineral Tax Act is set out in s. 2 of the Act (see Appendix F). Basically, it provides for a payment of 2% of net current proceeds until certain expenses have been recovered, then a payment of 13% of the net revenue of the operator for the balance of the life of the mine. The amount of the tax payable under the Mineral Tax Act is very much a function of the size, profitability and life of the mine, but it is reasonable to expect that the amount of

14 these taxes that may be payable over the life of a major metal mine in BC under the current legislation would be measured in the hundreds of millions of dollars. The Government has never indicated how much of the money derived from taxes under the Mineral Tax Act would be used for resource revenue payments to aboriginal groups, but it is interesting to know that the source of funds that is potentially available for this purpose is very considerable. One issue that arises from this is the timing of the availability of the funds. There will be some money the 2% of net current proceeds payable at all times that the mine is in operation and is selling its product. However, that revenue stream does not commence until a mine is operating, which is historically about 2 years after a new major mine commences construction. Another matter that is relevant to this Policy is that opening a new major metal mine is a very rare event in the province, and the timelines involved are very long. The last new major metal mine that opened in this province was Kemess South, which started construction in 1995, commenced production in 1997, and is expected to commence closure of its operations in the next year or so. In addition, the commencement of construction does not guarantee that any Mineral taxes will be paid - two major metal mine projects started construction in the last couple of years, but then stopped (Galore Creek 2007 and Ruby Creek 2008) before going into production

15 WHAT FACTORS WILL DETERMINE THE AMOUNT OF THE REVENUE SHARING? The answer to this question will be revealed over time as the Policy is implemented. One obvious consideration is the size and profitability of the mine itself. The Mineral taxes generated from the mine in any year will fluctuate based on many factors, including the amount of ore extracted, exchange rates, and world metal prices and of course whether or not the mine is even operating. It is likely that the revenue share of an aboriginal group will be tied to the amount of the taxes paid, so that can be expected to vary over time as well. The starting point in the exercise of determining the amount of the revenue sharing under the Policy is linked to the development of an Economic Community Development Agreement, referred to as an ECDA. This is a good demonstration of how the Policy is linked to the Transformative Change Accord, which speaks to how to close the gaps between aboriginal and non-aboriginal people in the province in the areas of education, housing and infrastructure, health, and economic opportunities. It is clear that the intention of Government is not to simply turn over a share of the money paid in taxes. Rather, the revenue is to be directed to specific purposes that will be set out in the ECDA. One of the first steps in the negotiation of a resource revenue sharing agreement is for the Government negotiators and the aboriginal group to develop the ECDA, which will be

16 specific to each aboriginal group that will be a participant in the program. At this time it appears that capacity funding from the Government may be available for the aboriginal group to assist in preparing the ECDA. Other specific factors that have been suggested will be considered in determining the amount of the revenue sharing in each individual case are the economic impact of the project on the community, the strength of the claim to the project area, the number of First Nations claiming the area, the population of each of the potential participant groups, the future potential development of the affected area, the degree of the impact, and the benefits that may be provided by the project proponent. HOW DOES THIS POLICY RELATE TO THE DUTIES OF CONSULTATION AND ACCOMMODATION? There is no direct linkage between the Policy and the duty of consultation. There is no apparent intention on the part of the Government to replace its duty of consultation by an implementation of the Policy. However, since one of the principles of the Policy is to minimize litigation, it is reasonable to assume that the Province will take the position that the implementation of the Policy is part of the process of consultation and accommodation in connection with a major mining project. One interesting development is that the negotiators of the Policy are being taken from the First Nations Initiatives Division of the Integrated Land Management Bureau. The Integrated Land Management Bureau is also developing an initiative to co-ordinate

17 consultation in relation to the many permits from many different provincial government agencies that are required to proceed with a major mining project. If the Government is successful in this initiative to coordinate consultation, then it is reasonable to expect that this Policy will become integrated into a larger consultation policy. HOW DOES THE POLICY RELATE TO IBAS? There is no direct linkage between this Policy and impact benefit agreements ( IBAs ), but the Policy is a relevant issue when considering an IBA. The Policy is designed to develop private agreements between individual aboriginal groups and the Province concerning new major mining projects. IBAs are private agreements between individual aboriginal groups and project proponents. IBAs have come to be generally expected in connection with new major mining projects. The Government has made it clear that the agreements with the Province under the Policy are not intended to be in substitution for IBAs that may be developed with the project proponent. The Government has also made it clear that an IBA is not a precondition to project approval. This policy appears, for example, in the Fairness and Service Code of the BC Environmental Assessment Office7 which provides that: The EAO encourages proponents to explore benefit-sharing agreements with First Nations where the parties consider that to be in their mutual

18 interest. The EAO will consider any information it receives regarding such agreements when assessing the impacts of a proposed project. However, such agreements are not considered preconditions to the completion of the review process or a decision by the Ministers. (p. 11 of Fairness and Service Code) The policy of the Government with respect to IBAs and revenue sharing appears to be very similar IBAs are encouraged, the Government is interested in knowing about IBAs if they exist and the parties agree to disclose them, but IBAs are not a precondition to a revenue sharing agreement. The topic of what should be included in an IBA has been the subject of many conferences and writings. A very thoughtful discussion on this subject was recently prepared by Woodward & Company.8 The discussion on Financial Accommodation, Compensation and Revenue Sharing has been reproduced at the back of this paper (Appendix G), and one extract from that discussion is below: While companies have to some extent accepted the fact that financial compensation for affected First Nations is a cost of doing business, it is safe to say that the private sector has expressed frustration with having to fill the governments shoes with respect to revenue-sharing. A company can be reasonably expected to take the view that it is paying royalties and 8 Benefit Sharing Agreements in British Columbia: A Guide for First Nations, Businesses, and Governments 2009 Prepared by Woodward & Company for the Ecosystem-Based Management Working Group

19 taxes to the government already, and that the government should either share that revenue with First Nations or adjust the royalty and tax rates to take into account company contributions to First Nations. From a public policy perspective, it is problematic for a number of reasons to have a patchwork of ad hoc private financial compensation packages to address unsettled aboriginal rights claims. It is fair to say that there is a general acceptance in the mining community of both a social licence to operate and a desire to work with aboriginal people who may be affected by a mining project. This includes is a general willingness to enter into agreements with aboriginal groups to define the benefits that they may expect to derive from the project, which can be expected to address such things as training, employment, contracting opportunities, environmental issues, dispute resolution, and mechanisms for effective implementation of the agreement. A major point of tension in those negotiations is often the issue of revenue sharing, as referred to in the Woodward & Company paper. As is noted in the news release that set out this Policy, BC is the first province in Canada to share direct revenue generated from mining. Not only does the Government taking charge of revenue sharing make sense from a public policy perspective, but this new Policy will alleviate the tension over revenue sharing discussions with the project proponent, resulting in the potential of much a improved relationship between the mining community and the aboriginal peoples of the province

20 ARE THERE OTHER POLICIES PROVIDING FOR RESOURCE REVENUE SHARING? There are other examples of resource revenue sharing policies that have been tried already in the mining and forestry sectors. In the forestry sector, the Province has entered into approximately 120 Forest and Range Agreements with different aboriginal groups since Key features of these agreements are that they are based on a formula, with limited discretion, and provide for both annual cash payments and some timber tenure. They are of fixed duration usually 5 years with the possibility of renewal. They are not revenue sharing agreements in the same sense as is proposed under the Policy for the mining sector, since the money paid under the Forest and Range Agreements is fixed in advance, and is independent of any particular revenue stream. These agreements have gone through a number of changes in form over the years. The approach taken by the Province with respect to these agreements has been criticized in one Supreme Court decision for being too formulaic,10 although that criticism was addressed to them in the context of a process of consultation and accommodation, as opposed to providing for revenue sharing. There have also been revenue sharing agreements negotiated with aboriginal groups based in the Treaty 8 area of the province. Blueberry River First Nations entered into an Economic Benefits Agreement with the Province in June, The Province entered into a similar Economic Benefits Agreement with 4 more signatories to Treaty 8 dated Huu-Ay-Aht First Nation et al. v. The Minister of Forests et al. [2005] BCSC

21 February 27, These agreements relate to oil and gas, forestry, and coal mining activity taking place in the province within Treaty 8. The agreements provide for initial Equity Payments, and minimum and maximum annual payments for a period of 14 years, with the specific amount of the annual payments to be determined each year based on a complex formula linked to the amount of activity and the revenue from resource development in those identified sectors. The money generated under the agreements is paid into trusts established to benefit the members of the participating signatories to Treaty 8. The agreements also include protocols that set out how consultation will take place during the terms of the agreements, and contain the agreement of the signatories that they will not interfere with activities authorized by the Province. WILL THIS POLICY BE APPLIED TO PROJECTS OTHER THAN MAJOR METAL MINES? It is reasonable to expect that there will be more resource revenue sharing with First Nations in the province, since it was a significant feature of the New Relationship document. Whether the approach taken by this Policy is applied, or some other approach is developed, may depend to a considerable degree on whether the Policy is viewed as a success. The following are some comments on various resource sectors. Metal Mining This is the sector that the Policy is focussed on, and where the Policy can be expected to apply

22 Mining Industrial Minerals Industrial minerals are rocks, minerals, or other naturally occurring inorganic substances of economic value that are not metallic ores, mineral fuels, or gemstones - such things as gravel, limestone, sandstone and pumice. There are approximately 35 such mines in the province, and as of August of 2008, the Mining Association identified 5 proposed projects in this sector. Orca Quarry on Northern Vancouver Island is understood to have revenue sharing arrangements with 2 local aboriginal groups, although those arrangements are directly between the proponent and the First Nations. It is reasonable to expect that the Policy will be applied to future mines in this sector. Coal Mining Most of the proposed new coal projects are located in the north-east portion of the province, where the land base is subject to Treaty 8. There are 8 signatories (i.e. participating First Nations) to Treaty 8 in the province, and 5 have signed Economic Benefits Agreements that provide for a revenue sharing formula in connection with coal mining. The Province has indicated a wish to have the other signatories of Treaty 8 enter into Economic Benefits Agreements as well. It seems most likely that the Policy will not apply in Treaty 8 to coal projects, and the revenue sharing model in the Economic Benefits Agreements (which is formula based) will be the model there. For any major new coal projects outside of Treaty 8, the Policy may be expected to apply

23 Since the Economic Benefits Agreements in Treaty 8 in the mining sector are limited to coal, it may be that the Policy would apply to new major metal mines in Treaty 8 although at this time none are proposed in the Treaty 8 area as recognized by the Provincial Government. Having said this, the Mount Milligan Gold/Copper Project is in the portion of Treaty 8 recognized by the Federal Government but not recognized by the Provincial Government, and is also within the Claimed Traditional Territory of the McLeod Lake Indian Band as defined under its recent adhesion agreement whereby it became a signatory to Treaty 8. It is likely that resource revenue sharing agreements under the Policy will be entered into with the McLeod Lake Indian Band for the Mount Milligan Project. Oil and Gas The northeast area of British Columbia, being a part of the Western Canada Sedimentary Basin, is the only current area of British Columbia producing commercial quantities of oil and gas; however, the province contains other sedimentary basins where oil and gas may be found.13 Since all of the current producing oil and gas areas in the province are within Treaty 8, it seems likely that the revenue sharing policy in the near future for oil and gas will be based on the formula approach contained in the Treaty 8 Economic Benefits Agreements, rather than the procedure outlined in the Policy. Forestry The forestry sector has taken a different approach to resource revenue sharing, utilizing the formula driven model of the Forest and Range agreements. The Forest and Range

24 model is well developed and it does not seem likely that the Policy will have much application in the forestry sector. Alternate Energy: Run of River and Wind Projects There are a large number of run of river and wind projects in various stages of development in the province, and there is considerable uncertainty as to how the aboriginal groups that may be affected by these projects might benefit from them. This is an area where a coordinated government policy would be helpful, and there may be lessons learned from the experience with the Policy that may ultimately benefit policy development for revenue sharing in these sectors. CONCLUSION The new Policy is still very much work in progress, and it is likely that it will be better understood once some agreements have actually been entered into. This may also allow the establishment of a consistent policy throughout BC, and result in greater certainty for the mining sector as well as the aboriginal people, which may mean more investment and ultimately more mines. The fact that the Policy is very flexible rather than formulaic is both an advantage and a challenge. The flexible nature of it will allow it to respond differently to each situation, but that may also make it difficult to apply since each situation will have to be carefully negotiated

25 The flexible nature of the Policy may be particularly appropriate for revenue sharing in connection with major mines, since there are likely to be very few of them in the near future. Very few First Nations are likely to receive any revenue under this Policy for some time, because of the small number of mines that are likely to proceed to production in the near future. However, there will likely be a positive result of the policy in addition to assisting in closing the gaps the Province taking charge of the historically problematic issue of revenue sharing has the potential of significantly changing and improving the relationships of the mining proponents and the First Nations that they engage with. Keith Clark Lang Michener LLP June,

26 APPENDIX A NEWS RELEASE OCTOBER 23,

27 APPENDIX B NEW RELATIONSHIP DOCUMENT

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32 APPENDIX C TRANSFORMATIVE CHANGE ACCORD NOVEMBER

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38 APPENDIX D FIRST NATIONS CONSULTATIVE BOUNDARIES MAP

39 APPENDIX E INDIGENOUS NATIONS TERRITORIAL BOUNDARIES MAP

40 APPENDIX F MINERAL TAX ACT, SECTION 2 Imposition of tax 2 (1) A person who is an operator must, for each mine of which that person is an operator, pay a tax in respect of each fiscal year of the mine equal to the aggregate for that mine of the following: (a) the amount, if any, by which 13% of the net revenue of the operator derived from the operation of the mine exceeds the aggregate of (i) the balance of the cumulative tax credit account at the end of the immediately preceding fiscal year of the mine, (ii) the amount of imputed interest determined under section 3 (b) for the current fiscal year of the mine, and (iii) the amount determined under paragraph (b); (b) 2% of the net current proceeds of the operator derived from the operation of the mine for the current fiscal year of the mine. (2) An operator may deduct from the tax otherwise payable under this section an amount equal to the lesser of the following: (a) the earned depletion base account of the operator for the particular mine at the end of the immediately preceding fiscal year of the mine determined in accordance with section 11 (3); (b) an amount equal to 25% of the tax otherwise payable before any deduction under subsection (3)

41 (3) An operator may deduct from the tax otherwise payable under this section royalties assessed and paid under the Mineral Royalties Act in respect of the calendar year 1976, to the extent that they have not been previously deducted under the Mineral Resource Tax Act or this Act. Nisga'a exemption 2.1 (1) In this section, "Taxation Agreement" means the Nisga'a Nation Taxation Agreement tabled in the Legislative Assembly on November 30, 1998, but does not include any amendments made to that agreement after that date. (2) Despite section 2, a person is not subject to tax under this Act if and to the extent that the Taxation Agreement provides that the person is not subject to tax under this Act. Treaty first nation exemption 2.11 (1) In this section, "tax treatment agreement" means an agreement among a treaty first nation, British Columbia and Canada that, (a) under the chapter of the treaty first nation s final agreement that sets out the agreement of the parties in relation to taxation, is required to come into effect on the date the final agreement comes into effect, and (b) is tabled in the Legislative Assembly on or before the date settlement legislation in relation to the final agreement receives Third Reading, and, for greater certainty, does not include amendments to the agreement made after the date the settlement legislation receives Third Reading. (2) Despite section 2, a person is not subject to tax under this Act if and to the extent that a tax treatment agreement provides that the person is not subject to tax under this Act

42 Imposition of tax on placer gold mine operator 2.2 A person who is a placer gold mine operator must, for each placer gold mine of which that person is an operator, pay in respect of each calendar year a tax equal to 0.5% of the amount that is the operator's proportionate share of the transaction value of the mineral product disposed of in the calendar year. Imposition of tax on quarry operator 2.3 (1) A quarry operator must pay in respect of each calendar year a tax equal to 15 multiplied by the number of tonnes of quarry materials referred to in subsection (2). (2) The number of tonnes of quarry materials that is to be used in the calculation in subsection (1) is the amount, if any, by which the quarry operator's proportionate share of the quarry materials that were removed from all of the quarries operated by the quarry operator in the calendar year exceeds the number of tonnes of quarry materials deducted under subsection (3). (3) For the purposes of the calculation set out in subsection (2), a quarry operator may deduct up to tonnes of quarry materials subject to the following: (a) the total number of tonnes of quarry materials that the quarry operator may deduct for a calendar year under this subsection in relation to all of the quarries operated by the quarry operator must not exceed tonnes; (b) the total number of tonnes of quarry materials deducted for a calendar year in relation to any one quarry under this subsection by all quarry operators who operate that quarry must not exceed tonnes

43 APPENDIX G BENEFIT SHARING AGREEMENTS IN BRITISH COLUMBIA A GUIDE FOR FIRST NATIONS BUSINESS AND GOVERNMENTS (EXTRACT)

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