First Nations Consultation And Impact Benefit Agreements

Duty to Consult First Nations

It is well known that the government of Canada has a duty to consult with First Nations groups and communities.  Consultation is required if existing or asserted Aboriginal rights may be impacted by a government decision, for example by the issuance of a permit related to a project.  Although the Crown is responsible for undertaking adequate consultation and accommodation, it is often advantageous for project proponents to undertake engagement and consultation with those First Nations who may potentially be impacted by a project.  Impact Benefit Agreements – or IBAs – can be an effective way for participants on a project to provide accommodation, although IBAs are separate from consultation.  An IBA is an agreement for the proponent to provide benefits to the First Nations in exchange for the Nations’ support of the project.

This area of the law is in the forefront of the news, particularly with the Province of British Columbia’s approval of a number of projects, such as the Site C Dam, the Kinder Morgan Trans Mountain Pipeline, and the Pacific NorthWest liquefied natural gas export facility.  Prior to the issuance of government permits and approvals, the Crown must fulfill its obligation to consult with the First Nations who may be affected by these projects.  This was reaffirmed and clarified by the Supreme Court of Canada in its decision in Tsilhqot’in Nation v. British Columbia, where the Court declared that the Tsilhqot’in Nation had title and management authority over its own territories.  The Crown may only override a First Nations’ title to land when the public interest is at stake and if certain criteria are met, including that the Crown must have carried out consultation and accommodation.

With the decision in Tsilhqot’in, the role of IBAs in project development has become even more important.  This is because the Supreme Court found that, where First Nations’ title exists, First Nations are granted a declaration of title and a right to govern the lands.  Accordingly, the consent of the First Nations must be obtained prior to the use of the land.

The right to control the land conferred by Aboriginal title means that governments and others seeking to use the land must obtain the consent of the Aboriginal title holders.[1]

As mentioned previously, the Crown has an obligation to consult and accommodate the First Nations in accordance with the proportionate strength of the First Nations’ claim to the land.  If the Crown fails to fulfill its duty to consult, then there are remedies available:

If the Crown fails to discharge its duty to consult, various remedies are available including injunctive relief, damages, or an order that consultation or accommodation be carried out.

…[I]f the Crown begins a project without consent prior to Aboriginal title being established, it may be required to cancel the project upon establishment of the title if continuation of the project would be unjustifiably infringing. [2]

The Court clarifies that it is the Crown, not third parties, that maintains the duty to consult and accommodate.  However, the Crown may delegate procedural processes and require consultation measures as part of a project’s authorization process.  As a result, IBAs are generally entered into at the commencement of a project.

For participants in the construction industry and proponents of development projects, there are implications and opportunities that arise due to the increased importance of the involvement of First Nations communities.  Resource developers and project proponents need to understand and meet their obligations to First Nations prior to and during the life of a project.  Before any development proceeds, a number of legal and regulatory requirements must be met.  In addressing these requirements, consideration must be given to First Nations’ consultation, including accommodation.  This can be addressed by being proactive in engaging First Nations and developing IBAs.

Impact Benefit Agreements

Where a project is contemplated that includes First Nations’ traditional territory, the negotiation of an IBA can outline the parameters of the project, the commitment and responsibilities of both parties, and how the First Nations will share in benefits of the operation.  IBAs often evolve from an initial “Memorandum of Understanding” and are developed into a final and legally binding agreement through consultation and negotiation between the proponent, the First Nations, and their respective legal counsel.

An IBA sets out what benefits and support the First Nations receive, in exchange for support of the project and the use of the First Nations’ traditional territory or land where the potential project is located.  The possible benefits range from guarantees of contracting and business opportunities to environmental protection to support of cultural and other community initiatives.  There is no standard form of IBA.  While there are common elements, each IBA is customized to address the First Nations’ needs and the circumstances of the project.

Typically IBAs span the entire life of a project:  initial negotiations, construction completion, project operation, and closure.  As such, these agreements have to be carefully and thoughtfully drafted, and consideration must be given to potential changes in circumstances and the requirements of the parties in the future.

Fundamental Requirements for an Impact Benefit Agreement

Notwithstanding the individualities of each agreement, here are some “best practices” related to topics that an IBA should include.

Commercial Requirements

These provisions stipulate that the project will provide benefits to First Nations in exchange for the First Nations’ support of the project and legal certainty.

  • Confirms that there has been sufficient consultation and adequate accommodation.
  • Typically addresses First Nations’ support, including an agreement to avoid claims, challenges, and/or delayed work, and the establishment of an implementation committee.
  • Creates a joint committee (the developer and the First Nations) to oversee implementation of the IBA, related agreements, and/or specific aspects of the project.
  • Confirms that the terms of the IBA cover the proponent’s contractors and subcontractors.
  • Periodic review every five to ten years and in response to changed circumstances (e.g., the project is sold to another developer).

Community Requirements

This section of the IBA concerns the benefits provided to the First Nations community during and as a result of the project.

  • Typically addresses the benefits for First Nations, such as employment opportunities and targets, skills training, capacity building, specific business opportunities, financial incentives, and how the project will consider the environment, cultural and social needs.
  • Consideration must be given to how the community will be involved on an ongoing basis (for instance, if and when community meetings will be held).

Labour and Economic Development Requirements

The employment opportunities that are available and how they will be offered to the contracting First Nations must be considered.

  • Recognition of and support for local First Nations businesses relevant to the project.
  • Typically addresses any preferential contracting, direct contracting opportunities, and/or how First Nations contractors are involved in the tendering process.

Environmental Requirements

Given the nature of projects, the impact on the environment is a central and significant issue that must be addressed.

  • Typically addresses how and what environmental planning and monitoring committees will be established.
  • In the event of an environmental error, remedial and reclamation actions must be stipulated.
  • There should be particularized efforts to minimize activity in culturally relevant areas, with cooperative involvement of the First Nations in decision-making.

Financial Requirements

Importantly, the financial benefits provided by the developer or owner to First Nations must be detailed, practical and able to be implemented.

  • Capacity funding should be provided for, to enable the First Nations to take full advantage of the components of the IBA.
  • Monetary compensation agreed to between the parties, the First Nations businesses, the community, and other participants, must be set out.

As stated above, each IBA is unique to the needs and necessities of the parties and the impact of the project.  An IBA should be tailored to the specific circumstances and needs of the First Nations community involved, which should be balanced against the ability of the project proponent to provide benefits.  Ultimately, the negotiating parties should employ an IBA as a beneficial means to confirm that the First Nations group is sufficiently consulted during the negotiation process and adequately accommodated.  While the Crown is responsible for consultation, it is up to project proponents to negotiate IBAs to provide sufficient and individualized accommodation.


[1] para. 76.

[2] paras. 89 and 92