Benchmarking Fiscal Benefit Distributions through Impact Benefit Agreements: A Case Study of the Trans Mountain Expansion Project by Daniel Dale B. Com., University of Victoria, 2012 Project Submitted in Partial Fulfillment of the Requirements for the Degree of Master of Resource Management in the School of Resource and Environmental Management Faculty of Environment © Daniel Dale 2020 SIMON FRASER UNIVERSITY Summer 2020 Copyright in this work rests with the author. Please ensure that any reproduction or re-use is done in accordance with the relevant national copyright legislation. Approval Name: Daniel Dale Degree: Master of Resource Management Title: Benchmarking Fiscal Benefit Distributions through Impact Benefit Agreements: A Case Study of the Trans Mountain Expansion Project Project Number: 748 Examining Committee: Chair: Myfannwy Pope Master of Resource Management Candidate Thomas Gunton Senior Supervisor Professor Sean Markey Supervisor Professor Date Defended/Approved: May 11, 2020 ii Abstract Impact Benefit Agreements (IBAs) are increasingly important in the planning and successful execution of major resource development projects in Canada. IBAs are tools of Indigenous community development and are intended to help return resource development benefits to locally impacted Indigenous communities. Fiscal benefits delivered through IBAs are often a much needed source of community funding. This report presents a methodology to evaluate the quantum of fiscal benefits Indigenous governments receive through IBAs relative to benchmark standards developed though a literature review. The methodology is applied to a case study of the Trans Mountain Expansion Project. The results show that IBAs likely fall short in their objective to deliver an adequate share of fiscal benefits to Indigenous governments relative to the fiscal benchmarks used in the evaluation. This report aims to provide tools and recommendations to aide First Nations in the negotiation of IBAs so as to provide a more equitable distribution of the benefits of natural resource development in Canada. Keywords: impact benefit agreement; fiscal benefits; community development; consultation & accommodation; natural resource development; Trans Mountain Expansion Project iii Acknowledgements First and foremost, I would like to thank my friends and family who have provided me with much needed encouragement, support, and distractions during my academic journey. Second, thank you to my senior supervisor, Dr. Thomas Gunton, for sharing your knowledge, perspective, and comments in this field. Additionally, thank you to Dr. Sean Markey and the rest of the IBA research team for the leadership and guidance as I started out on this research project. Finally, I would also like to acknowledge the financial support provided by the Canadian International Resource Development Institute, the Social Sciences and Humanities Research Council, and Simon Fraser University, without which this project would not have been possible. iv Table of Contents Approval ............................................................................................................................... ii Abstract ............................................................................................................................... iii Acknowledgements ............................................................................................................. iv Table of Contents .................................................................................................................v List of Tables ...................................................................................................................... vii List of Figures.................................................................................................................... viii List of Acronyms ................................................................................................................. ix Chapter 1. Introduction ................................................................................................. 1 1.1 Introduction ................................................................................................................... 1 1.2 Research Rationale & Report Purpose ........................................................................ 2 1.3 Report Methodology ..................................................................................................... 2 1.4 Report Organization ...................................................................................................... 3 Chapter 2. IBA Overview ............................................................................................... 4 2.1 Introduction ................................................................................................................... 4 2.2 Canadian IBA History ................................................................................................... 4 2.3 The Legal and Regulatory Context for IBAs................................................................. 5 2.4 The IBA Negotiation and Implementation Process ...................................................... 8 2.5 IBA Content: ................................................................................................................ 11 Chapter 3. Literature Review ...................................................................................... 14 3.1 Introduction ................................................................................................................. 14 3.2 Background & Context ................................................................................................ 14 3.3 Literature Review Methods ......................................................................................... 20 3.4 Best Practices and Standards for Fiscal Benefits Provisions from the IBA Literature ........................................................................................................................................... 20 3.5 Best practices and standards for fiscal benefits provisions from the SFU IBA Fiscal Instrument & Regime Research Database ....................................................................... 31 3.5.1 Publicly Available IBAs ................................................................................... 31 3.5.2 Other Publicly Available Benefits Agreements .............................................. 34 3.6 Summary ..................................................................................................................... 36 3.7 Additional Considerations ........................................................................................... 38 Chapter 4. Case Study Context .................................................................................. 40 4.1 Introduction ................................................................................................................. 40 4.2 Trans Mountain Expansion Project ............................................................................ 40 4.2.1 Project Description ......................................................................................... 40 4.2.2 Project Assessment........................................................................................ 42 4.2.3 Public Interest ................................................................................................. 43 4.2.4 TMX Project Timeline ..................................................................................... 45 4.3 TMX and First Nations ................................................................................................ 48 4.3.1 First Nations Rights ........................................................................................ 48 v 4.3.2 TMX and First Nations Consultation & Accommodation ............................... 50 4.3.3 The Fiscal Benefits of the TMX Benefits Sharing Agreements ..................... 52 Chapter 5. Analysis ..................................................................................................... 55 5.1 Introduction ................................................................................................................. 55 5.2 Overview of Methods .................................................................................................. 55 5.3 Limitations ................................................................................................................... 58 5.4 Results ........................................................................................................................ 60 5.4.1 Comparison of Actual IBA Fiscal Benefits to Benchmark Federal Income Tax Fiscal Benefits ......................................................................................................... 60 5.4.2 Comparison of Actual IBA Fiscal Benefits to Benchmark Provincial Income Tax Fiscal Benefits .................................................................................................. 62 5.4.3 Comparison of Actual IBA Fiscal Benefits to Benchmark Municipal Property Tax Fiscal Benefits .................................................................................................. 63 5.4.4 Comparison of TMX IBA Fiscal Benefits to Comparable Publicly Available IBAs ......................................................................................................................... 64 5.4.5 Comparison of Actual IBA Fiscal Benefits to Total Economic Benefits Delivered by TMX ...................................................................................................