Transfer Payments to the Government of Yukon for the Care and Maintenance, Remediation and Management of the Closure of Contaminated Sites in Yukon

1. Authorities

Department of Indian Affairs and Northern Development Act, R.S.C., 1985, c. I-6, s. 4; 1993, c. 28, s. 78; 2002, c. 7, s. 154(E).

The Department of Indian Affairs and Northern Development Act mandates the Minister of the Department of Indian Affairs and Northern Development to oversee Indian affairs, as well as the resources and affairs of Canada's three northern territories. The Yukon Act (2002) and the Yukon Northern Affairs Program Devolution Transfer Agreement (DTA) transferred the law-making power and responsibility for the administration and control with respect to public lands and rights in respect of waters to the Yukon Legislature.

2. Summary

In Yukon, effective April 1, 2003, authority to manage public lands and resources was transferred to the Government of Yukon pursuant to the Yukon Northern Affairs Program Devolution Transfer Agreement (DTA) and the Yukon Act (2002). Upon devolution, the Government of Yukon took administration and control of public lands, including abandoned mine sites. Under the terms of the DTA, Canada is responsible for the cost of remediation of the major mine sites, defined in the DTA as the Type II Sites, which were created in the Yukon during Canada's control of lands and the Government of Yukon is responsible for implementation of remediation plans.

Three of the Type II Sites, namely Faro, BYG Mount Nansen, and Clinton Creek, are currently under Government of Yukon management. The United Keno Hill Mine has recently been acquired by private interests and Canada under the sale agreement is paying for the remediation of historical environmental liabilities at the site. The remaining three sites (Ketza River, Viceroy Brewery Creek and Minto) are currently at various stages of their operational life and, if abandoned, their remediation may become a responsibility of the Government of Yukon. The primary purpose of this authority is to enable the Department of Indian Affairs and Northern Development (DIAND) to transfer funds to the Government of Yukon toward meeting Canada's financial and legal obligations arising from the DTA in respect of the remediation of the abandoned Type II Sites. The federal government, however, has a significant role in ensuring due diligence review of the overall remediation plan(s), annual work plans and in ensuring accountability of the use of federal funds.

3. Purpose and Objectives

In order to discharge the Government of Canada's legal and financial obligations arising from the DTA, with respect to the remediation of Type II Sites, a separate Authority for the Minister of Indian Affairs and Northern Development is necessary which would allow transfer payments to the Government of Yukon.

This authority would be the key instrument for DIAND on behalf of the Government of Canada to transfer funds to the Government of Yukon toward fulfilling Canada's obligations arising from the DTA in respect of remediation of the Type II Sites in Yukon. The overall objective and expected outcome of this authority would be to make progress towards meeting Government of Canada's legal and financial obligations, and reduction in the Government of Canada's contaminated sites liabilities in respect of the Type II Sites in Yukon.

The remediation of Type II Sites in Yukon will make a direct contribution to the DIAND's Northern Affairs Organization's Strategic Outcome - "The North":

Northern Governance - Political Development and Government Relations; and
Northern Land and Resources - Contaminated Sites.

The objectives of transfer payments under this authority are:

To meet and reduce federal government's legal and financial obligations arising from the DTA, in respect of Type II Sites;
To eliminate, reduce or manage long-term risk to human health, safety and the environment in a cost effective manner;
To implement remediation/risk management, care and maintenance and long-term monitoring and closure plans at the Type II Sites; and
To maximize social and economic benefits that may accrue to First Nations and Yukoners.

4. Application and Duration

This authority will be effective June 1, 2009. The time frame for this Authority to fund the Remediation of Type II Sites which, and in particular for the Faro site, will span over several decades. Not later than each fifth year, starting in 2009, until the expiry of this Authority, the Contaminated Sites Program of DIAND intends to review the relevance and effectiveness of the transfer payment program and continued need for this Authority and to seek any necessary amendments.

5. Definitions

Affected First Nation: means in relation to a Type II Site, the First Nation(s) as set out below:

Faro Mine: Ross River Dena Council; Liard First Nation; Kaska Dena Council; Selkirk First Nation
United Keno Hill Mines: First Nation of Nacho Nayak Dun
BYG Mount Nansen: Little Salmon Carmacks First Nation
Ketza River: Ross River Dena Council; Teslin Tlingit Council; Liard First Nation; Kaska Dena Council
Clinton Creek: Tr'ondek Hwech'in
Viceroy Brewery Creek: Tr'ondek Hwech'in and First Nation of Nacho Nayak Dun
Minto: Selkirk First Nation

Care and Maintenance^{Footnote 1}: Operational activities conducted at a site, most commonly an idle or closed mine, to maintain the structures and infrastructure necessary to prevent contaminant migration while remediation/risk management strategies are being determined so that:

Human health and the environment are protected;
Sites are in regulatory compliance; and
An increase in federal financial liability associated with insolvent Northern mines is prevented.

Consultation: means facilitation and organization of fora, meetings and workshops, the collection and dissemination of information or other activities that relate to the solicitation and exchange of information, ideas and points of view, to expand knowledge and understanding of environmental issues and the proposed remediation plans.

Monitoring^{Footnote 2}: the routine (e.g. daily, weekly, monthly, quarterly) checking of quality or collection and reporting of information which may include periodic or routine checking and measurement of certain biological or water-quality variables or the collection and testing of samples of effluent, leachate or marine estuarine receiving water for toxicity.

Remediation^{Footnote 3}: means the prevention, minimization, or mitigation of an impact through the development and application of a planned approach to make improvements at a site in order to remove, destroy, contain or otherwise reduce availability of contaminants to receptors of concern, and to remove, destroy or contain safety hazards, which improvements may require on-going monitoring and care and maintenance.

Type II Site: are limited to the following mine sites in the Yukon:

Faro;
BYG Mount Nansen;
Clinton Creek;
United Keno Hill Mines;
Ketza River;
Viceroy Brewery Creek; and
Minto.

6. Eligible Recipient

The recipient of transfer payments under this authority will be the Government of Yukon. Transferred funds will support capacity for the delivery of activities related to:

consultations;
care and maintenance;
monitoring;
remediation and management planning;
regulatory approvals;
engineering,
construction; and
remediation of Type II Sites in the Yukon.

7. Stacking Provisions

The Government of Yukon receiving funds under this authority will be required to provide work plans which include expenditure plans and cash flow needs including actual and anticipated sources of revenues/funds from:

Other programs within DIAND;
Other federal government departments and organizations;
Other levels of government;
Other internal sources; and
Other sources.

Federal transfer payments under this authority will be negotiated to be the least amount required to carry out the work plans and shall conform to the stacking provisions of the Treasury Board's Directive on Transfer Payments. The assessment of the required level of funding will take into consideration the total government assistance (federal, provincial, territorial, municipal and any securities and deposits for the site) towards project costs. There will be a reduction of the federal transfer payments made under this authority if other government assistance is obtained or is expected to be obtained for the same eligible costs. In the event that actual total government assistance paid to a recipient exceeds 100%, the level of assistance provided to the recipient under this authority will be reduced and the amount of any overpayment shall constitute a debt due to Canada and may be offset against other funds owing by Canada to the recipient.

The maximum level of total government assistance (stacking limit) will be up to 100% of eligible costs, for all supportable eligible activities.

The program officer responsible for administering the agreement will review financial information submitted by the recipient, and in the event the stacking limit is exceeded, will initiate appropriate procedures.

Any amount to be repaid to Canada will be established as a debt due to Canada and recorded by Canada as an account receivable.

8. Third Party Delivery

Where the recipient delegates authority or transfers funding received under this authority to an agency (i.e. an authority, board, committee or other entity authorized to act on behalf of the recipient), or to another third party, the original recipient of federal funds shall remain liable and accountable to Canada for the performance of the obligations under the transfer payment agreement.

9. Method of Delivering and Method of Payment

Government of Yukon

Transfer of funds to the Government of Yukon under this authority would be made through multi-year agreements, pursuant to the framework set out in Appendix I of the Directive on Transfer Payments, with provisions considered appropriate for agreements between federal-provincial-territorial governments. These agreements would reflect the federal share of the costs of the multi-year remediation plan of a Type II Site. Remediation plans for each abandoned Type II Site will be developed cooperatively by Canada and Government of Yukon and, where possible and necessary, in consultation with any Affected First Nation(s). Flowing from the overall multi-year remediation plans, the Government of Yukon will be required to develop and update regularly detailed work plans, expenditure and cash flow requirements, provide revenue and expenditure reports and results achieved and set out expected results for the following fiscal year which would become the basis for providing funds and measuring performance and accountability.

Affected First Nations

Although the Government of Yukon will be primarily responsible for implementing remediation plan(s) and in this process may provide some funds to any Affected First Nation for certain activities, it is anticipated that Canada may also be required to directly support Affected First Nations to meet Canada's legal and financial responsibilities, in particular for those pertaining to Canada's duty to consult and, if required, to accommodate and to support certain capacity building activities consistent with the objectives of this Authority. These resources will be transferred under the terms and conditions set out in Contribution Authority 334: 'Contribution for promoting the safe use, development, conservation and protection of the North's natural resources.' Under the above authority, the Affected First Nation will be required to submit project proposals, work plans, cash flow and expenditure requirements and the project's linkage with the remediation plan and objectives of this Authority.

All recipients, including the Government of Yukon, will be required to respect and comply with the Conflict of Interest Act, the Conflict of Interest and Post-Employment Code for Public Office Holders or The values and Ethics Code for the Public Service, the Lobbying Act (as appropriate) and that no member of the Senate or the House of Commons shall be admitted to any share or part of the federal funding under this authority or to any benefit to arise therefrom that is not otherwise available to the general public. However, where a comparable legislation of the recipient government exists, or where the application of a federal legislation is not appropriate in an agreement with the other order of government, the recipient government's legislation or none of the above noted legislation would apply.

10. Eligible Activities and Eligible Expenditures

Eligible Activities

The primary focus of transfer payments made under this Authority would be to remediate contaminated Type II sites in Yukon. The Government of Yukon would be the principal recipient of funds to implement remediation plans. However, some projects may be carried out by Affected First Nations or their agencies. These projects would be directly related to the activities set out below and arise from the remediation plan of a site. The main activities that will be carried out under this transfer payment authority will generally follow the 10-Step process (see Appendix B-2) set-out for Federal Contaminated Sites Action Plan (FCSAP) projects and include assessments and evaluations, care and maintenance, developing and implementing remediation plans, and long-term care and maintenance and monitoring of the Type II Sites and may consist of the following additional activities:

Care and Maintenance — Operational activities conducted at a site to maintain the structures and infrastructure necessary to prevent contamination migration so that: human health and the environment is protected; sites are in regulatory compliance; and an increase in federal financial obligation is prevented;

Consultation — Means facilitation and organization of fora, meetings and workshops, the collection and dissemination of information or other activities that relate to the solicitation and exchange of information, ideas and points of view, to expand knowledge and understanding of environmental issues and the proposed remediation plans;

Core Activities — Means ongoing support or administrative functions which enable organizations to manage tasks that support plans for the remediation of Type II Sites in Yukon;

Monitoring — Means the steps necessary to verify and document the on-going success of the remediation/risk management measures that were implemented;

Project Management — Means measures necessary for governments, and affected First Nations, and their contractors including project management and obtaining any regulatory and permitting approvals, for the development and implementation of remediation/management plans for the Type II Sites in Yukon;

Remediation — Means the prevention, minimization, or mitigation of an impact through the development and application of a planned approach to make improvements at a site in order to remove, destroy, contain or otherwise reduce availability of contaminants to receptors of concern, and to remove, destroy or contain safety hazards, which improvements may require on-going monitoring and care and maintenance;

Capacity Building — Means projects centring on measures, which support expert analysis of remediation proposals; increase understanding and skills related to roles and responsibilities; or increase skills to participate in the assessment/evaluation, on-going monitoring and care and maintenance and development or implementation of plans for the remediation/management of the Type II Sites in Yukon.

Eligible Expenditures

The list of eligible expenditures will be set out in transfer payment agreements and will, in general, follow eligible expenditures set out for the Federal Contaminated Sites Action Plan (FCSAP)^{Footnote 4} and the DTA. In general, the list would include expenditures, which are, in the opinion of DIAND, reasonable and necessary for the recipient to carry out an approved project/activity. Examples of eligible direct and indirect project costs for activities that may be conducted throughout steps 2 to 10 of the 10-step process include:

Consulting, engineering, and contractor services and disbursements required to assess or reduce the risk and associated financial liabilities at suspected or confirmed contaminated sites;
Mobilization/demobilization of equipment and personnel to suspected or confirmed contaminated sites;
Health and safety provisions for consultants/contractors and federal government employees;
Restricting site access while conducting assessment, remediation/risk management, or care and maintenance activities;
Public/stakeholder consultation and outreach pertaining to a contaminated site;
Preparation of regulatory submissions related to approvals of a project;
Reasonable financial risk response mechanisms that have been identified in a project risk management plan prepared in accordance with accepted industry standards; and
Activities to address accidental damage to property that occurs during an assessment, care and maintenance, or remediation/risk management project; and
The activity is included in existing legal agreements.

The following activities are some examples of costs considered ineligible under FCSAP:

Ongoing administrative site costs or costs that are part of the Custodians normal operating expenses;
General maintenance costs, except with care and maintenance projects or maintenance of a site remediation facility;
Costs for activities undertaken on sites that are not part of the remediation plan of the approved project submission;
Costs associated with the assessment or remediation of "sick buildings" due to occupational health and safety risks that they may pose;
Costs associated with relocation or temporary accommodation of people who are at risk from contamination at a site or who must be displaced to allow an assessment or remediation project to be conducted; and
Activities under step 1 (determining whether a site is suspected of being contaminated) of the 10-Step process.

11. Maximum amount payable

Based on currently available information, remediation costs for the Type II sites currently under Government of Yukon management are expected to range between approximately $500 million and $1.3 billion. If and when the remaining Type II sites are abandoned by their operators and become a Government of Yukon responsibility, these estimates would increase. The maximum annual transfers to the Government of Yukon under this Authority for remediation purposes would be limited to $60 Million (Appendix B-1). If the maximum limit is expected to be increased, DIAND will seek appropriate approvals for a higher amount.

12. Basis and Timing of Payments

DIAND intends to enter into multi-year transfer payment agreement(s) with the Government of Yukon in accordance with the framework set out in Appendix I: Transfer Payments to Other Orders of Government, of the Directive on Transfer Payments and this Authority. Financial certainty for the Government of Yukon, who will be the project proponent, is a critical factor in successfully implementing multi-year remediation plans and in achieving the Government of Canada's objectives set out above.

Timely reporting of expenditures incurred by the Government of Yukon, when the agreement involves reimbursement of eligible expenditures by the Government of Canada, will be made so that Canada's obligations can be recorded and charges made to appropriations in the appropriate fiscal year, regardless of the timing of reimbursement payments.

Payments to the Government of Yukon will be normally made, on a monthly or a quarterly basis, or on, the basis of achievement or performance objectives or as reimbursement of (eligible) expenditures incurred. Advance payments, may be made and these will be based on the Yukon's cash flow requirements.

Since the Government of Yukon has a well established financial management system comprised of accounting controls, reporting and auditing system in place, a requirement to apply a hold back of funds in a transfer payment agreement with the Government of Yukon would not be appropriate.

Remediation projects are inherently uncertain in nature and are often subject to severe weather conditions, logistical and transportation constraints and subject to a short working season which is often unpredictable North of 60. Ability of the Government of Yukon to carry-over unexpended funds to the following fiscal year will allow the Government of Yukon to mitigate some of the risks, noted above, and enter into favourable terms for multi-year contracts with private sector engineering, and environmental firms and other suppliers and better plan and execute remediation activities which are multi-year in nature. Any carried-forward funds will remain subject to Canada's requirements of appropriate and periodic financial reporting requirements set out in the transfer payment agreement(s). Expenditures made from the funds carried over into the following fiscal year would be recorded and charged to appropriations in the fiscal year funds were originally advanced.

A transfer payment agreement with the Government of Yukon will contain indemnification provision in favour of Canada. Such provision, however, would recognize the agreements already reached in the Devolution Transfer Agreement.

Transfer payment agreement(s) with the Government of Yukon will set out structures to ensure appropriate level of oversight and that all financial and work progress reports, auditing and evaluation requirements over the federal transfer payments are met on a timely basis.

13. Repayable Contributions

Not applicable.

14. Funding Levels Changes

Funds sourced from FCSAP would be subject to adjustments to the FCSAP program.

15. Monitoring and Reporting

DIAND has internal control procedures, systems and human resources to ensure due diligence is properly exercised in the development of remediation plans and in, identifying multi-year funding requirements developed by the Government of Yukon. DIAND has sufficient capacity and human resources to assess a First Nation's capacity to manage funds and meet the terms and conditions set out in Contribution Authority 334: 'Contribution for promoting the safe use, development, conservation and protection of the North's natural resources.' This responsibility is shared by DIAND headquarters and regional offices.

16. Governance

Transfer payment agreement(s) under this Authority will set out structures and mandates for the purpose of reviewing work plans and cash flow requirements of the Government of Yukon setting out roles for Canada, Government of Yukon and Affected First Nation representatives on the committees to ensure expected results are achieved. Canada may directly engage or require the Government of Yukon to engage the services of an Independent Engineer or other experts to provide an independent assessment of plans and works completed by the Government of Yukon using the funds transferred pursuant to this Authority.

17. Accountability Framework and Evaluation

The evaluation process or criteria to be used to assess the effectiveness of the contributions will be addressed through performance evaluation. Transfer payments agreement with the Government of Yukon would include reporting requirements setting out the frequency of reports and the subject matter to be included in any such reports, including the milestones and targets set and achieved (with respect to construction of facilities and engineering works, level of contamination, capacity building, socio-economic benefits in terms of employment (Northern/Aboriginal), training (Northern/Aboriginal), number of local businesses engaged (Northern/Aboriginal), reduction in Canada's liability and financial resources received and expended). The transfer payment agreements would also provide for Canada's ability to conduct audits and evaluations, as required.

18. Audit Framework

The audit process or criteria to be used for auditing contribution recipients will be determined in consultation with DIAND's Audit and Evaluation Sector.

19. Other Terms and Conditions

DIAND has the capacity to manage the transfer payments under this authority. The costs for managing and administering funds under this authority will be identified and set-aside in the total cost of meeting the Government of Canada's legal and financial obligations arising from the DTA. Other terms and conditions for agreements with the Government of Yukon will respect the federal-provincial-territorial government relations and be consistent with the overarching purpose that funds transferred under this authority are to meet Canada's financial and legal obligations arising from the DTA.

20. Official Languages

As a public government, the Government of Yukon is not subject to the Official Languages Act (Canada). However, the Government of Yukon must comply with the requirements of its own Languages Act (Yukon), which, in addition to Aboriginal languages, includes English and French as among Yukon's official languages. The Government of Yukon will be asked to produce any signage related to remediation of Type II Sites in English and French.

21. Appendix B-1: Estimated Annual Remediation Costs - Type II Sites

($, 000)

Site	2009/10	2010/11	2011/12	2012/13	2013/14
Faro Mine	22,346,083	25,125,000	25,188,000	37,094,000	41,000,000
Mount Nansen	3,223,313	7,575,000	5,013,000	3,913,000	3,500,000
Clinton Creek	493,000	76,000	76,000	76,000	60,000
United Keno Hill Mine
Contingency	6,000,000	8,000,000	7,600,000	10,000,000	11,140,000
Total	32,062,396	40,776,000	37,876,000	51,083,000	55,700,000

22. Appendix B-2: Federal Contaminated Sites Action Plan (FCSAP)

Steps for Addressing a Contaminated site

Step 1

Identify Suspected Site

Step 2

Historic Review

Step 3

Initial Testing Program

Step 4

Classify Site

Step 5

Detailed Testing Program

Step 6

Reclassify Site

Step 7

Develop Remediation/Risk Management Strategy

Step 8

Implement Remediation/Risk Management Strategy

Step 9

Confirmatory Sampling and Final Report

Step 10

Long Term Monitoring

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Date modified:: 2013-12-05