On April 15, 2016, Bill No. 149, The Mineral Resources Act (2016) (2016 Act), passed its second reading in the NS House of Assembly. Although the 2016 Act does contain some good news for the industry, there’s some risky news too: its provisions could have a significant impact on the mining industry in Nova Scotia, even though it’s not a complete overhaul of the current regime.

Here’s what’s good, what’s risky and what’s neutral in the 2016 Act. 

THE GOOD NEWS

The 2016 Act does contain some “good news” for industry members:

Extended Timing. The 2016 Act extends several timelines relative to The Mineral Resources Act (1990) (1990 Act), arguably making them both more realistic and administratively feasible for both industry members and the government:

• Exploration Licenses. Exploration licences are for terms of two years, with the possibility of two year renewal terms, up from one year terms under the 1990 Act (sections 43 and 48(2)).
• Production must commence within five years of obtaining a lease or non-mineral registration, up from two years under the 1990 Act (sections 64(1)(d), 74(1)(a), 97(d), and 99(1)(a)).
• Lease terms may be shorter or longer than 20 years; under the 1990 Act, lease terms and lease renewal terms were permitted for 20 year periods only (sections 64(2), 68).
• Ministerial decisions. The Minister and Registrar are required to make certain decisions within prescribed timelines, though the Minister retains the broad discretion to modify such timelines (e.g., sections 12, 27, 32 and 35).

New Planning Requirements. The 2016 Act also mandates new planning requirements for certain industry participants that generally reflect current industry trends and best practices, despite imposing additional obligations on participants and permitting the Minister to intervene in the event of non-compliance:

• Reclamation plan & security. A reclamation plan (section 86) is now required, the content of which will be set out in regulations. There’s no “grandfathering” for lessees or registrants under the 1990 Act; they must file a reclamation plan when the 2016 Act comes into force. Given the pre-existing security requirements, participants’ security obligations won’t necessarily increase with the 2016 Act; as under the 1990 Act, security must still be posted to provide for reclamation of the area that might be disturbed by activities (section 88). Under the 2016 Act, the Minister can review the mineral lease or non-mineral registration if security doesn’t meet the prescribed level for reclamation of peak disturbance (sections 74(1)(e) and 99(1)(e)). 

• Stakeholder engagement plan. Similarly, licensees are now required to prepare and implement a stakeholder engagement plan (section 44), the required content of which the regulations will set out. While a new obligation under the 2016 Act, many industry members have already recognized the importance of stakeholder engagement to successful projects. Arguably, however, it’s impossible to legislate an appreciation for the importance of meaningful engagement, and it remains to be seen whether legislating this requirement will ultimately result in better engagement between industry and stakeholders. 

THE RISKY NEWS

But the 2016 Act isn’t a completely “good news” story for industry members; the 2016 Act raises some real uncertainties and risks of which industry members must be aware and for which they must be prepared: 

Provincial royalties in limbo. The 2016 Act is notable for what it doesn’t contain: provisions on royalties payable to the province that are detailed in the same degree as those in the 1990 Act. In particular, the 2016 Act doesn’t address the amount and calculation of the royalty; instead, the instructions for determining rates and amounts of royalties payable will be set out in the regulations – which haven’t yet been developed – creating a high degree of uncertainty around a very important issue. The government, in the second reading debates, indicated that the regulations will be drafted in the next few months. 

New investigation powers & new privacy concerns. The 2016 Act gives the Mine Assessor and other officers expanded powers of entry and investigation that may cause industry members some concern about privacy. In particular an officer, when obtaining information on the amount and value of the output of a mine, may “use any computer system at any place to examine any data contained in or available to the computer system”, amongst other powers (sections 123, 124 and 128). From a risk management perspective, industry members should consider data storage and retention policies for sensitive information not required to be provided to the Crown or retained under the 2016 Act. The 2016 Act also gives conservation officers a new enforcement role (section 20) and with it, powers of arrest (section 129). 

More offences & graver penalties. The 2016 Act adds offences and stiffens the penalties for them, and an industry member’s obligations for making a mistake under the 2016 Act could look very different than it did under the 1990 Act:

• New Offences. As in the 1990 Act, consent is still required to explore Crown and private lands but rather than make the consent process less onerous, the 2016 Act explicitly states that it’s an offence to perform exploration work on Crown lands without the required consent (section 142). Exploration on private lands without consent was an offence under 1990 Act, but the 1990 Act didn’t expressly articulate offences related to Crown lands; they were instead captured by the general provision making all failures to comply with the Act offences. Another new offence is removing a sign or notice posted by the Department of Natural Resources (section 147).

• Stiffer penalties. Penalties for performing surface work without consent or mining without the appropriate lease or registration (among other offences) may attract fines as high as $100,000/day for corporations or $50,000/day for individuals; the 1990 Act prescribed maximum fines for these offences at $10,000/day. Furthermore, where a person receives a monetary benefit as a result of committing an offence, courts can order an additional fine in the amount of the benefit (section 151) and can impose the full cost of remedying any situation that resulted from an offence (section 155).

• Extended limitation periods. Individuals may be subject to a prosecution for offences for a longer period of time than under the 1990 Act. Under the 2016 Act, summary offences have a limitation period of two years after the later of the date of the offence or the date on which the Minister had evidence of the offence (section 154); currently, the Crown must start summary proceedings within six months of the offence.

Ministerial consent for lease and registration transfers. The Minister’s written consent is still required for a transfer of a lease or non-mineral registration, but the 2016 Act will expand the scope of what is deemed to be such a transfer. Absent proper planning, this expanded requirement could delay certain transactions. Both the sale of a controlling interest in a corporation holding a mineral right or non-mineral registration or the transfer of a mineral right or a non-mineral registration from a parent to a subsidiary will be deemed to be a transfer requiring the Minister’s written consent (section 105). The 1990 Act was silent in this respect.

THE NEUTRAL NEWS

There are some changes in the 2016 Act that, while different from the 1990 Act, may have limited practical impact on industry participants:

Lease distinctions. The 2016 Act eliminates the distinction between a “special lease” and a “mineral lease” found in the 1990 Act. However, this seems more a change in name than practical substance because the Minister still retains the authority to withdraw lands from being subject to an application for a mineral right for all or certain minerals (section 59).

Administrative Decision-Makers. Cabinet may appoint a commissioner or establish a board to hear appeals of decisions made under the 2016 Act, and the Minister may delegate decision-making for surface access rights to this new decision-maker (section 22).  However, this structure must first be enabled through regulation and it’s not yet apparent whether Cabinet will ultimately appoint a board or commissioner or if it does, what decisions it will delegate.

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Please contact your McInnes Cooper lawyer or any member of our McInnes Cooper Mining Law Team to discuss this topic or any other legal issue.

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