Revenue Sharing with First Nations in BC

 A lot is being said these days about revenue sharing as the province uses revenue sharing to “provide financial benefits and to secure First Nations support in Natural Gas projects[1].”

People are asking why should the province share revenue from natural resources in First Nation territories?  The answer is simple, revenue sharing is based on recognition of title. As title-holders/owners of the land, First Nations must be given a share of the revenue that reflects their title. Revenue sharing must be fair and equitable and be part of reconciliation that it acknowledges title to the land. The recent Supreme Court of Canada case in Tsilhqot’in confirmed that Aboriginal title means that the First Nation holds an exclusive right to decide how to use and control the land and to benefit from those uses.   Tsilhqot’in confirms that revenue sharing should be based on title.

As part of reconciling title, BC should be revenue sharing on all resources past, present and future. Of course none of the revenue sharing agreements signed to date acknowledge that revenue sharing is based on title. It is considered as an accommodation which it should not be. Solutions under Tsilhqot’in are a long ways off if this continues to be the case.

In 2005 in the New Relationship, the province of BC committed to revenue and benefit sharing. Further, they promised to establish processes and institutions for revenue and benefit sharing. Little of this was done. In fact attempts for several years to share gaming revenue were given a solid no from the province without providing reasons why not.  Every province except Quebec and BC share gaming revenue.

In February of 2005 before the New Relationship was accepted by the Chiefs in BC, the Supreme court of BC decided in the Huu-ay-aht[2] case imposed formulas that were found in the Forest Range agreements that were based on $500 per person did not reflect the strength of claim or the degree of infringement. Later a different formula was put in place that reflected a percentage of the Forest revenue of forests that lie within the territory.[3]

The province went on in 2010 to do revenue sharing on mining with the Kamloops Indian Band and Skeetchestn Indian band and again predetermined that 37.5% of the Mineral Tax, penalty and interest[4].  The purpose of that agreement is to confirm understandings on how BC has fulfilled its legal duty to consult and accommodate and to provide benefits to members.

When the Clean Energy Act (2010) was passed, it included revenue sharing. 50% of the money taken in by the province from land and water revenues from “new projects” is available to First Nations for capacity building and revenue sharing. 75% of that fund is available for First Nations revenue sharing which works out to 37.5% of the revenue from land and water revenues for the life of the project.

Recent LNG agreements with the Yekoochee, Gitxaala and Kitselas First Nations will receive initial, one-time payments upon the effective date of the agreements, and construction-related payments - 50% when construction of a pipeline project begins, and the other half once the pipeline project is in operation.

How are Revenues to be shared?

Resource Revenue sharing would need to come from the resources within the territory of the First Nation and paid to them. It is within the territory that the First Nation has rights and title. Global revenues for the entire province like gaming revenues can be determined on another formula as negotiated with First Nations.

Shared areas between First Nations could be shared equally from that area until such time as overlap areas are resolved by way of written agreement. First Nations should be resolving their overlaps without the government deciding for them.  This becomes a lot more complex as the impacts on the territory may differ due to proximity of the project.

Revenue sharing should be a negotiable item based on the ownership of the land and the impact of any proposed project on the lands and resources and rights of the First Nation. Not a take or leave it formula that the province puts forward.

Right now, revenue sharing from LNG and other pipelines and mines are used as a way to get the First Nation to approve projects within their territory.

For some First Nations who run on small budgets, being offered a substantial upfront payment is hard to turn down. Even though a First Nation may be intrinsically against a project, their need for money to assist their community becomes a priority for them. Or they believe there will be minimal impacts or hope there will be no environmental incidences that degrades the territory and the ability of their people to exercise their rights. It is short-term gain for possible long term devastating effects that the payments they accept will not begin to compensate for loss of rights or way of life.

The number of incidences we have seen for leaks and explosions has increased and so the risk is high.  The province worked hard to get their consent and passed a regulation that natural gas pipelines cannot be changed for oil.  Regulations can be changed easily and this is no guarantee to the First Nations that this won’t change.

These First Nations who are giving their consent to such projects should be insisting on the Free Prior and Informed consent (FPIC) of other First Nations to allow fracking at the source, on the waters where the LNG will be shipped and the territories where the pipeline goes through. If a First Nation insists on FPIC for themselves, they should respect other First Nations right to the same.

In order to get the LNG revenues, the First Nation has to acknowledge that they have been fully consulted and accommodated and will not bring legal action to challenge the project.  They release the government from any legal action in relation to almost everything the government could be responsible for.  They also agree that they will not participate in any actions that would oppose the project in anyway.  This is a high price for a First Nation to pay for the compensation they will receive. That the purpose of the agreement flagrantly says revenue sharing is to get First Nation approval of projects and not to recognize title tells you where the political will to resolve title is.

This is a tool the province uses all the time in other types of agreements like Incremental Treaty Agreements and accommodation agreements. They take away the right of the First Nations legal and political rights respecting a certain project in exchange for money or other benefit.  This is a far different scenario than basing revenue sharing with First Nations based on their aboriginal title.  There is a lot of work for the province to do under the Tsilhqot’in ruling and revenue sharing based on title would go a long way to starting negotiations in the right way.

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