CRITICAL ISSUE 1:

Weighing the Risks and Benefits

The Issue

There is no standard guidance for how Indigenous Peoples might weigh the potential risks and benefits of entering into a benefit agreement in the LNG sector. Understanding, needs, capacities and benefits typically requires a case-by-case approach across an entire LNG project’s life-cycle and beyond.

Benefits: Binding agreements between proponents and communities offer opportunities to share in the economic benefits generated by resource extraction. For instance, they can offer communities access to an income stream in the form of royalties or other payments, as well as employment and procurement from Indigenous-owned enterprises. These revenues can assist in meeting a community’s short-term and often urgent needs for services such as housing, health and education, and to augment Indigenous incomes that are usually below national averages (O’Faircheallaigh, 2010, 69. See also (Findlay and Wuttunee, 2007; Mihesuah, 2003; United Nations Permanent Forum on Indigenous Issues, 2004; US DOE, 2017).

Agreements can also contribute to development by providing opportunities for communities to be involved proactively, and continuously, in managing the cultural, social, and environmental impacts of resource use (Innis and MacIntosh, in Mills and Sweeney, 2013). According to Cueva (2017) from an Indigenous standpoint, BAs enhance local development by increasing the level of participation of a historically disadvantaged population.

The negotiation of these agreements could also greatly reduce uncertainties for proponents, over the legality and the legitimacy of a project, considering the legal context surrounding resource development and Indigenous land rights in Canada (Papillon and Rodon 2017; Bradshaw and McElroy 2014; Rodon, Lemus-Lauzon and Schott, 2018, 9).

Risks: There is a very limited body of literature on potential risks to First Nations’ communities as a result of entering into BAs, particularly in the context of the LNG sector. The World Bank (2012) identifies several risks in the creation of formal BAs, though these are framed primarily from the perspective of proponents as follows:

Formal agreements can foster a counter-productive environment of mistrust and uncertainty if the parties lack commitment to/or understanding of the process and anticipated outcomes
Potential perceptions that a community or group has been misled or coerced into signing a deal, or that a “backroom deal” has been brokered with one or more parties to the detriment of others and may contribute to conflict at the community level.
Formal agreements, and the legal stipulations they often include, can lead to an interpretation of compliance that results in a minimalistic approach. When this outcome occurs, it may leave communities feeling like their counterparts across the negotiating table have not lived up to the spirit and intent of agreements.

Abbreviations

AEM – Agnico Eagle Mines Limited

ASDF – Ahafo Sustainable Development Forum

AWBEN – Aboriginal Women’s Business Entrepreneurship Network

BA – Benefit Agreement BC British Columbia

BCFNDGI – BC First Nations Data Governance Initiative

BMZ German Federal Ministry for Economic Cooperation and Development

BNL – Barrick Niugini Limited

BSA – Benefit Sharing Agreement

CBA – Community Benefit Agreement

CDA – Community Development Agreement

CIRNAC – Crown-Indigenous Relations and Northern Affairs Canada

DIO – Designated Inuit Organizations

EIA – Environmental Impact Assessment

EMB – Environmental Management Board

EWB-MSV – Engineers Without Borders Canada - Mining Shared Value Initiative

FNFTA – First Nations Financial Transparency Act

FNLNGA – First Nations Liquefied Natural Gas Alliance

FNNBOA – First Nations National Building Officer’s Association

FPIC – Free, Prior and Informed Consent

GIZ – German Development Agency

HIA – Health Impact Assessment

IA – Impact Assessment

IBA – Impact Benefit Agreement

ICMM – International Council on Mining and Metals

IFC – International Finance Corporation

IFI – International Financial Institution

IIBA – Innuit Impact Benefit Agreement

INAC – Indigenous and Northern Affairs Canada

IOL – Inuit-Owned Lands

ISC – Indigenous Services Canada

KitIA – Kitikmeot Inuit Association

KivIA – Kivalliq Inuit Association

KLC – Kimberley Land Council

LIA – Labrador Innuit Association

LLG – Local Level Government

LNG – Liquefied Natural Gas

M&E – Monitoring and Evaluation

NADeF – Newmont Ahafo Development Foundation

NLC – Northern Land Council

NLCA – Nunavut Land Claims Agreement

NTI – Nunavut Tunngavik Incorporated

OSR – Own-Source Revenue

PJV – Porgera Joint Venture

PSAB – Procurement Strategy for Aboriginal Business

QIA – Qikiqtani Inuit Association

SEMC – Socio-Economic Monitoring Committee

SML – Special Mining Lease

TCS – Tax Credit Scheme

UNDRIP – United Nations Declaration on the Rights of Indigenous Peoples

Key Terms

Benefit Agreements

In this guide, the term Benefit Agreement (BA) is used as an umbrella term for agreements that vary in scope, scale, sector and types of parties to the agreement.

Depending on the emphasis, there are over 25 terms that are used to refer to the concept of benefit agreements (See Box 1). Within the literature the concept of benefit agreements (BAs) is varied and tends to be defined as a governance arrangement or as a mechanism for being a ‘good’ corporate citizen and securing a social licence to operate (Sarkar et al., 2010). Woodward & Co. and the Nanwakolas Council (2009) propose a definition that is more centred on the perspective of Indigenous Peoples:

Benefit agreements describe a written agreement that is the outcome of a consultation process about a proposed resource extraction, project or development that has the potential to impact the Aboriginal rights or interests of one or more Aboriginal groups in Canada.

Box 1: Benefit Agreements Lexicon

Accommodation Agreements

Benefits Sharing Agreements

Community Contracts

Community Development Agreements

Community Development Initiatives

Community Joint Venture Agreements

Cooperation Agreements

Development Agreements

Empowerment Agreements

Exploration Agreements

Impact Benefit Agreements

Indigenous Land Use Agreements

Interim Measures Agreements

Investment Agreements

Landowner Agreements

Market Access Agreements

Participation or Partnership Agreements

Project Support agreements

Shared Responsibilities Agreement

Social Responsibility Agreements

Social Trust Funds

Socio-economic Monitoring Agreements

Standard-setting or Certification Agreements

Indigenous

The term Indigenous is a broad term that captures First Nations, Métis and Inuit communities. It is often used now to replace Aboriginal, which is also a broad term that has been historically used to denote First Nations, Métis and Inuit, and is legally defined in section 35(2) of the Constitution Act, 1982 as follows: “In this Act, the ‘Aboriginal peoples of Canada’ includes the Indian, Inuit and Metis peoples of Canada”. The term “Indian” is a statutory term legally defined in the federal Indian Act.

For the purpose of this guide, the term Indigenous is used interchangeably with the term First Nation(s) and does not refer to Inuit or Métis. If the terms Aboriginal or Indian are used, they apply to specific policies, legislation or organizations, direct quotes from a study or publication, or the term used in a given country context.

Government /State

Reflecting language- in-use by Indigenous Peoples, the guide uses the words government and the state interchangeably. In other communities of practice and disciplines, the term “state” is understood as an organisation or political community with a defined territorial jurisdiction, with specific administrative, legislative and legal bureaucracies through which the state’s power is exercised, where as the “government ” is composed of individuals who control the state apparatus and employ the power of the state at a given time.

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