QUEBEC’S BILL 55 (AN ACT RESPECTING TRANSPARENCY MEASURES IN THE OIL AND GAS INDUSTRIES): WASTEFUL DUPLICATION?

On June 1, 2015 Canada proclaimed into force the Extractive Sector Transparency Measures Act (“Federal Act”). The Federal Act requires mining, oil and gas companies to disclose payments made to Canadian and foreign governments and others, including aboriginal groups.

The Federal Act is the result of a commitment made by Canada at the 2013 G8 summit. The “Publish What You Pay” movement and its supporters have long been lobbying G8 and other rich country governments for mandatory payment disclosures to combat corruption and increase governmental accountability in poorer countries. For a discussion of the Federal Act please refer to the June 2 bulletin of Keith Chatwin, Ivan Grbesic and Christopher Yung.

On June 11, 2015 Quebec’s Minister for Mines, Luc Blanchette, tabled Bill 55 before the National Assembly. Bill 55 closely mirrors the Federal Act and many of its defined terms and obligations are near carbon copies.

Why did Quebec feel it was necessary to introduce legislation similar to the Federal Act, especially since companies headquartered or operating in Quebec are already subject to the Federal Act?

Firstly, Quebec wants to occupy the field and does not want to appear to be ceding any core competency to the Federal Government. Constitutionally, natural resources are a provincial competence. The federal Act provides at section 10 that compliance with the reporting requirements of another jurisdiction (e.g., Quebec) may be an acceptable substitute. Once Bill 55 becomes law it is likely that Quebec will enter into an administrative arrangement with the Federal authorities to allow for substitution.

Secondly, and more importantly, the primary focus of the Quebec legislation is domestic. Bill 55’s main objective is not to fight corruption in remote locales. Rather, the main purpose of Bill 55 is to facilitate the development in Quebec of oil, gas and mining projects. A rapidly ageing Quebec population content with the status quo has become refractory to new extractive and industrial projects. Quebec has a bad case of NIMBY. What the Quebec government is trying to do is increase the social acceptability (social license) of projects by providing objective information to its population. Experience has shown that local populations properly informed of the tangible benefits offered by projects are far more likely to support such projects. The Quebec wind power industry is a case in point. Quebec is currently working on a social acceptability policy and Bill 55 is an essential building block of such policy.

Thirdly, Quebec wants to control the availability and credibility of the information. Quebec’s obligations may end up being more stringent than under the Federal Act. For example, Bill 55 currently imposes a disclosure obligation when the total value of payments in a year is $100,000. The Federal Act has the same threshold but also provides that such threshold may be increased or decreased by regulation. Any threshold increase is unlikely to be viewed as helpful by Quebec. In fact, Quebec is likely to expand the ambit of Bill 55. The Quebec Mineral Exploration Association issued a press release on June 11, 2015 supporting Bill 55 but asking that it go further. The Association wants ALL exploration companies, irrespective of size, to be subject to the disclosure obligations. The reason for this is that confidentiality provision in the agreements with local governments and First Nations prevent fulsome communications with investors and make raising capital more difficult.