Editorial: Ontario treaty ruling seeds new uncertainty

Mining companies and mineral explorers in northern Ontario woke up to a whole new heightened level of legal and bureaucratic uncertainty in late August, with the rendering by the Ontario Supreme Court of a decision in Keewatin v. Minister of Natural Resources.

The case came about when, in 2000, the Grassy Narrows First Nation southwest of the municipality of Red Lake challenged clear-cutting licenses given in 1997 by the Ontario government to forest-products giant Abitibi Consolidated (now AbitibiBowater, which owns or operates 18 pulp and paper mills and 24 wood products facilities in the U.S., Canada and South Korea).

The licenses of concern were located in the Keewatin Lands, which are part of the Treaty 3 area that covers 142,450 sq. km of northwestern Ontario and southeastern Manitoba – essentially encompassing the Ontario and Manitoba portions of the Lake of the Woods watershed, and including notable settlements such as Kenora, Sioux Lookout and Fort Frances.

The Canadian government entered into Treaty 3 with the Saulteaux Tribe of the Ojibway Indians in 1873, and the lands became part of the province of Ontario in 1912 with the passing of the federal Boundary Extension Act. 

To boil down the latest decision, the court ruled that the federal government and not the provincial government has jurisdiction over resource industries within the larger Treaty 3 area, and the federal government is furthermore obligated to preserve the Ojibway Indians’ right to hunt and fish.

In this specific case, it means the Ontario government did not have authority under Treaty 3 or the Constitution Act of 1867 to grant lumber licenses to Abitibi in Treaty 3 land.

Score a major victory for the Grassy Narrows camp, and expect backlash in the form of an appeal.

You don’t need to be a legal scholar to realize that this decision lays the groundwork for a flurry of court challenges by First Nations groups to all sorts of resource-related licenses granted by the Ontario government in the Treaty 3 area, and perhaps other similar Treaty areas, which stretch in a wide arc from Ontario’s James Bay Lowlands to the McKenzie Delta in the Northwest Territories.

Indeed, in the days following the Keewatin decision, the First Nations leadership for the 26 aboriginal communities in the Treaty 3 area, called Grand Council Treaty #3, moved swiftly to request a judicial review to ask the court set aside the Ontario government’s award of contracts related to hydroelectric power generation in Treaty 3 territory.

With both the Ontario and Canadian governments having assumed long ago that jurisdiction over resource industries in the Treaty 3 area had been transferred to the province, there is no indication that the federal government even welcomes the extra regulatory burden.

We’ll see if the federal government moves with new legislation to transfer jurisdiction in these matters once and for all to the provincial government, or whether the clock turns back to 1911 and the federal government again becomes the new pre-eminent regulator over resource industries in Treaty 3 lands and any other Treaty lands that fall in-line with the Keewatin decision.

For more on the Keewatin decision, see the commentary on this page, and Fasken Martineau’s detailed bulletin at www.fasken.com.

• There was some political resolution for miners in another jurisdiction popular with miners: Peru.

The new left wing government of Ollanta Humala has honoured its election promise to impose a windfall-profit tax on miners in the country, with the creation of a tax that will squeeze an extra 3 billion soles (US$1.1 billion, or 3-5% of operating profits) from mining companies per year at current production rates and metals prices. The decision was announced by Prime Minister Salomon Lerner in Congress on Aug. 25.

The broad feeling among miners is one of relief that the issue is settled and the new tax isn’t as high as the US$2-3 billion per year some feared, and is in keeping with taxes in the country’s chief competitor for investment dollars, Chile.

The Peruvian Congress also unanimously approved a bill that will require companies to consult with rural native communities before building mines or drilling for oil. Last year, Peru’s former President Alan Garcia vetoed a similar bill passed by Congress, saying it would have given rural communities too much power to nix investments critical to the nation.