More transparency for Québec’s mining, oil and gas industry

On October 21, 2015, the National Assembly of Québec adopted the Act respecting transparency measures in the mining, oil and gas industries (PDF) (the “Act”), which came into force on the same day.

The adoption of the Act follows the tabling of Bill 55 (“Bill 55”) on June 11, 2015, and was the subject of special consultations held in early fall of 2015. Several participants representing the industry and civil society were invited to participate in these consultations by filing briefs and representations made before the Québec National Assembly’s Committee on Agriculture, Fisheries, Energy and Natural Resources. Among other things, industry participants emphasized the need to harmonize certain provisions of Bill 55 with the Extractive Sector Transparency Measures Act (SC 2014, c. 39, s. 376), in force as of June 1, 2015 (the “Federal Act”).

Pursuant to these public consultations, amendments were made to Bill 55, some of which take into account the concerns expressed. The Act nevertheless incorporates most of the provisions of Bill 55.

We therefore invite you to read our bulletin entitled “Bill 55, the Act respecting transparency measures in the mining, oil and gas industries (Québec) and other developments in connection with the Mining Act (Québec)” for a summary of the principle provisions of such bill, in particular with respect to the statement a subject entity must file, at the end of each of its fiscal years, to Québec’s financial markets regulator, the Autorité des marchés financiers, regarding payments of prescribed categories it has made during such fiscal year  to one or several specified payees, including Native communities and governments (“Annual Payments Statement”). Payees are further described in our previous bulletin referred to above.

This bulletin draws your attention to the more important amendments to Bill 55 and briefly comments on the reference to “social acceptability” found in the provision of the Act specifying its purpose.

Please note that an Annual Payments Statement is not required from a subject entity for its fiscal year in progress on October 21, 2015. Also, payments made to Native governments and communities will not need to be disclosed in an Annual Payments Statement before June 1, 2017.

Reporting Threshold: $ 100,000 by payment category

Under Bill 55 (prior to amendments), the $100,000 reporting threshold was calculated globally rather than by category.

Like the Federal Act, the Act specifies that the threshold at which an Annual Payments Statement must be made by a subject entity is attained if he has made payments (in cash or kind) to a same payee in a prescribed payment category during a fiscal year totalling at least $100,000.

Subject Entity

The Act states that a legal person, corporation, trust or other organization which carries out exploration for or development of mineral substances or hydrocarbons may be subject to the Act (if it meets all prescribed criteria). Under Bill 55, the trust was not expressly listed as a possible subject entity. The term “trust” was also added elsewhere in the Act, where relevant, for example in the provisions relating to common control between corporations, partnerships, trusts or other organizations.

Monetary Administrative Penalties

Pursuant to Bill 55, minimum and maximum amounts for a monetary administrative penalty were set in the case of a natural person ($250 and $2,000) and in other cases ($1,000 and $10,000). Since a monetary administrative penalty can only apply to subject entities, which, according to the applicable criteria, excludes natural persons, the minimum and maximum amounts in the case of a natural person are not in the Act. Only the minimum and maximum amounts applicable to a subject entity, namely a legal person, corporation, trust or other organization, are set in the Act ($1,000 and $10,000 per monetary administrative penalty).

We remind you that the Act provides that the directors and officers of a subject entity that has defaulted on payment of an amount owed pursuant to a monetary administrative penalty are solitarily liable, with the entity, for the payment of the amount, unless they establish that they exercised due care and diligence to prevent the failure which led to the claim.

5 Year Report to the Government

The Act provides that the Minister must, no later than October 21, 2020, and, subsequently, every five years, report to the Government on the implementation of the Act and on the advisability of amending it. Bill 55 simply did not provide for such a requirement.

Social Acceptability

By inserting in the purpose of the Act the fact of “fostering the social acceptability” of natural resource exploration and development projects (same as in Bill 55), the Québec legislator enshrines for the first time the notion of “social acceptability” in a legislative text. The purpose of the Act thus distinguishes itself from that of the Federal Act, whose stated purpose is to implement Canada’s international commitments in the fight against corruption through the adoption of measures applicable to the extractive sector, including to enhance transparency and impose the obligation to report payments made by entities. For more information on the Federal Act, we invite you to read our bulletins “New Risks for Extractive Sectors – Transparency Law in Effect” and “Government Payment Disclosure: Introduction of the Extractive Sector Transparency Measures Act in the House of Commons”, as well as the guidance document published by the Federal Government (PDF).

This notion is referred to in the purpose without being defined in the Act or in any other legislative or regulatory text of Québec and without its scope or parameters being set therein.

Acknowledging the growing importance of setting a more comprehensive framework for social acceptability, the ministère de l’énergie et des ressources naturelles, Québec’s Minister of Energy and Natural Resources, and Minister responsible for the Plan Nord, Mr. Pierre Arcand, launched a large social acceptability workshop in the fall of 2014.[1] The discussion tables of this workshop have been concluded and the report on those discussions is now publicly available.

This report should serve as the reference for the drafting by the Government of Québec of a green paper expected in the spring of 2016. This green paper should then be the subject of parliamentary committee consultations.[2]

With the notion of “social acceptability” now enshrined in a Québec legislative text, it will be interesting to follow the next developments of the social acceptability workshop and to see how the notion and its scope may be interpreted by some, in particular by Québec authorities and courts and whether in the context of the application of the Act or otherwise , in the absence of clearly stated and objective criteria set in Québec’s legislative body.

Be prepared 

Now that the Act has come into force, mining, oil and gas corporations and other organizations must determine if they may be subject entities within the meaning of the Act and, as applicable, ensure themselves that they have the right tools available to allow them to comply with these new obligations.

For strategic advice adapted to your needs, in particular with respect to the Act, do not hesitate to contact a member of our Mining or Corporate Social Responsibility practice groups.