Resource-sharing agreements: Partnering with Indigenous groups

Much of the focus of Saskatchewan’s economic rebound after the last few years of instability has been on the resource sector, both on new or alternative energy sources such as helium or small modular reactors, as well as traditional industries such as potash. Both new and existing proponents hoping to embark on new ventures in Saskatchewan will need to familiarize themselves with the Saskatchewan resource market and recognize that their proposed project is likely to take place on the traditional territory of at least one First Nation or Indigenous group in Saskatchewan. Proponents will therefore need to consider whether to seek out partnerships with First Nations, Indigenous groups, or Indigenous Community-Owned Businesses.

Why Partner?

Nikita Rathwell, McKercher LLP

Partnerships between resource companies and First Nations or Indigenous Community-Owned Businesses can take many forms, from a formal business partnership such as a joint venture, to entering into a resource-sharing agreement such as an Impact Benefit Agreement (IBA). IBAs are agreements between First Nations or Indigenous groups, or the Economic Development Corporation or Indigenous Community-Owned Business that has been formed and operates to benefit the First Nation or Indigenous group. IBAs can also be known by other names, such as mutual benefit agreements or participation agreements.

The concept of an IBA is based on the Constitutional obligation, held by the provincial or federal government, to consult and, where appropriate, accommodate Indigenous groups when it considers conduct that might adversely impact potential or established Aboriginal or treaty rights. This duty is often triggered in the context of resource development when the government considers the approval of a license or permit for a proponent to operate under the relevant legislative scheme.

While the duty to consult lies with the government and not with proponents, certain procedural aspects of the duty can be delegated to proponents. However, the real risk to proponents in relation to the duty to consult is that the government does not adequately discharge their duty, or the potentially impacted Indigenous group opposes the proponent’s project and brings court proceedings claiming that the government has not fulfilled their duty. While such a court proceeding may only be between the Indigenous group and the government, they usually involve a request for an injunction. If granted, such an injunction has the effect of halting and consequently delaying the progress of a proponent’s project.

It should also be noted that entering such partnerships has the added benefit of following the Truth and Reconciliation Commission of Canada’s Call to Action #92, which calls upon Canada’s corporate sector to adopt and apply the principles of the United Nations Declaration on the Rights of Indigenous Peoples, including a commitment to meaningful consultation, building respectful relationships, obtaining the free, prior and informed consent of Indigenous peoples before proceeding with economic development projects, ensuring that Indigenous peoples have equitable access to jobs, training and education opportunities and ensuring that Indigenous communities gain long-term benefits from economic development projects.

It is, therefore, in the best interests of a proponent to identify, at an early stage, whether the rights of any Indigenous groups may be adversely impacted by their proposed project and proactively reach out to such groups to discuss the project and the potential for partnership. In doing so, proponents will decrease the likelihood of opposition to the project, which can often cause delays and increase costs.

What do these Partnerships entail?

An IBA or similar agreement will usually contain:

  • Capacity funding for participation for the impacted Indigenous group
  • Funding for necessary traditional use or archeological studies
  • Environmental protections
  • Some sort of revenue-sharing mechanism that results in economic benefits and income to the Indigenous group tied to the extraction of the relevant resource
  • Business opportunities for Indigenous Community-Owned Businesses which might include a right of first refusal or preference in the bidding process
  • Employment, education, and training provisions including job and employment targets, training funds, and scholarships

An IBA will also usually contain protections for the proponent, such as dispute resolution provisions that stipulate how the parties will resolve disputes without resorting to expensive and lengthy court battles, and a promise of public support from the Indigenous group.

An Indigenous group or proponent that is considering a partnership relating to a resource project should consult legal counsel. McKercher LLP has groups of lawyers who are knowledgeable about the Saskatchewan market and have considerable experience assisting proponents, First Nations, and Indigenous Community-Owned Businesses with the development of business structures and negotiation of IBAs.

Nikita Rathwell is a partner with a practice focused on aboriginal law. She assists First Nations clients with a variety of litigation matters in Federal Court, including election appeals, applications for judicial review of Band Council decisions, and rights-based claims. She also assists clients with governance and corporate matters, including reviewing existing laws and drafting new laws, and providing advice to First Nations’ economic development corporations and businesses on corporate structure, governance, and contract negotiation.

McKercher LLP
374 Third Avenue South, Saskatoon, SK
(306) 653-2000