It has been some time since I humbly expressed my opinion on the easement case to the Ontario Mining and Lands Commissioner. Please make allowances, for it is dated.

The Divisional Court of Ontario, apparently guided by the wisdom of the Office of the Attorney General of Ontario, discounted many of the assertions in the appeal ruling. I have had to accept the judiciary counter arguments, being just an average citizen, without the extensive legal training needed to properly interpret the Mining and Aggregate Acts.

Regardless, common sense maintains that this case is about whether the Minister of Natural Resources can effect an expropriation from a minority joint-venturer, the respondent, in order to prefer the exclusive interest of the majority joint-venturer, the applicant, to it's own benefit, without just and specific proven public cause upon hearing.

KWG Resources must summon all of it's abilities to present an appeal for a truly reasoned and final judgement. - Laura Brown

2274659 Ontario Inc. and MNR v. Canada Chrome Corporation

IN THE MATTER OF

A referral by the Minister of Northern Development and Mines to the tribunal pursuant to subsection 51(4) of the Mining Act, R.S.O. 1990, c. M. 14, as amended, of an application under the Public Lands Act, R.S.O. 1990, c P. 43, as amended, (PLA) for disposition under the PLA of surface rights over portions of the Mining Claims and the Transferred Mining Claims.

July-30-2013

Easement rights should not be granted in the case of 2274659 Ontario Inc. v Canada Chrome Corporation based upon reasoning within the following topics relevant to the case;

• Priority of Rights: "First-Come" Basis

• Intended Use For Staking a Mining Claim

• Scope: A Section 51 Hearing

• The Multiple Use Principle

• Infringement of the Rights Holder

Priority of Rights: "First-Come" Basis

An underlying principle in both the Mining Act and the Aggregate Resource Act is that rights, patents, leases, licenses or other instruments of title are granted on a "first-come priority" basis.

Except where the Mining Act otherwise expressly provides, section 63 states that the "priority of recording" prevails. In subsection 44.(2), regarding the staking of claims, it is the "priority of completion of staking" that prevails. Under the surface rights compensation subsection 79.(8), the Mining Commissioner "shall take into account which of the rights was applied for first and, except where injustice would result, shall give the holder of those rights due priority in the consideration of the dispute between the parties."

In subsection 28.(3) of the Mining Act, an application accepted under the Public Lands Act or any other Act, the application shall have priority over any mining claim staked "during" the time that the application is pending. However, in the easement case of "2274659 Ontario Inc. v Canada Chrome Corporation", the respondent's unpatented mining claims were recorded "before" the Crown's Order No. W-TB-172/11, dated January 17, 2012 at 12:01:01 a.m., which withdrew all surface and mining rights from prospecting, staking out, sale or lease to make way for the applicant's Transload Facility and Transportation Corridor. Canada Chrome Corporation's staked mining claims take priority over the Crown's application for withdrawal.

Non-observance of this fundamental "first-come priority" principle by the tribunal would allow the Crown to effect an expropriation from a minority joint-venturer, the respondent, in order to prefer the exclusive interest of the majority joint-venturer, the applicant.

Further, under the Aggregate Resources Act, the right to consolidated aggregate is also granted on a first-come priority basis (i.e. "receipt" or "acceptance" by the MNR of an aggregate permit application vs. staked mining claim). It is a question of timing as to which instrument takes precedence. (ARA Guiding Principles policy no. A.R. 5.00.06) The respondent's staked mining claims were registered previous to the Ministry of Natural Resource's "receipt" or "acceptance" date of the Cliffs Natural Resource's applications for aggregate permits along the Transportation Corridor, should the area covered by the aggregate permit applications and mining claims overlap.

If a mining claim is staked and/or recorded before an application for an aggregate permit or license is received for the same land, then an aggregate permit will be issued only to the recorded holder(s). The former instrument, CCC's staked mining claims, have priority in the consideration for aggregate right permits by the MNR under the Aggregate Resource Act.

Intended Use For Staking a Mining Claim

The Mining Act states that the lease of mining rights and, where applicable, surface rights, can only be used for mining purposes. [s.85] However, staked claims are to be used as “mining land” or for another purpose of the “mineral industry.” [s.54 (1)]

Canada Chrome's recorded intent is to use these contiguous staked mining claims for multiple purposes specific to the “mineral industry” and has followed all mineral claim provisions of the Mining Act to pursue claims to lease;

• To complete the $15 million engineering survey and soil testing programs to locate and then construct a requisite mine railroad to transport a precious mineral, chromium, from a mine deposit located in the Ring of Fire to a southern market distribution point at Exton, Ontario. The MNDM has confirmed acceptance for filing $7.5 million of geotechnical data as assessment work completed on the claims constituting the transportation corridor. Without the use of the land on these staked mining claims for an ore transport corridor, the proposed chromite deposits remain uneconomic to develop. The route is considered essential for it's mining purposes.

• Scarce local consolidated aggregate required for railway embankments within the contiguous mining claims. The mine transportation route choices are extremely limited by topography, as the swamps and marsh lowlands of the James Bay largely surround the mine area.

• Debut Diamonds, CCC's sister company, uses it's geochemical analysis of the nearly 6,000 soil samples from 811 borings recovered at 500 meter intervals along the entire length of the CCC claims to examine Kimberlite Indicators Minerals, KIM's, to help identify distant diamond mineral deposit types. Debut holds 85 unpatented mining claims consisting of 436 total active claim units along the proposed mine railway ore transport corridor.

On August 10, 2012, the Ontario’s Ministry of Northern Development and Mines, (MNDM), advised Noront Resources in writing that Ontario was in early stage discussions with Cliffs Natural Resources regarding it's intent to contribute financially to develop a north – south all-season private industrial ore haul road, subject to various environmental, regulatory and financial approvals, that would connect the Ring of Fire to existing provincial infrastructure. The MNDM wrote that their "current expectation was that the all-season road would be made available for use by industrial users other than Cliffs, with access fees generally based on proportional road usage, although specific terms are still to be determined.”

Cliffs Natural Resources also proposes to use chromite concentrate transport trucks which exceed the maximum allowable Canadian gross vehicle weight on public roads and therefore these trucks are restricted to operation on private property only. Neither the applicant nor the Ministry of Natural Resources, (MNR), can successfully argue that Canada Chrome intends to use these contiguous staked mining claims for purposes "other than" for mining purposes. For how could that be, since the applicant also proposes to use the surface on these very same mining claims for the purpose of the mineral industry, i.e., the use of a vital private all-weather mine road to haul chromite concentrate mineralization to market?

Further, the MNR, in it's "ARA Guiding Principles policy no. A.R. 5.00.06" on Mining Act, Claims and Leases, gives an example of an allowable intention for staking a mining claim (subject to the provisions of the Mining Act) which does not specifically involve the recovery of minerals beneath it's boundaries yet can be defined as for the purpose of the “mineral industry”, i.e., temporary "protection from competing interests".

"The issuance of a licence/aggregate permit is not dependent upon an individual acquiring the mining rights under the Mining Act. However, there are advantages to staking the land, as it provides protection from competing interests while an application under the ARA is being prepared and/or would allow exploration activities to be undertaken (subject to the provisions of the Mining Act)." (ARA Guiding Principles policy no. A.R. 5.00.06)

Upon affirmation of the company’s 308 kilometre-long railroad right-of-way, Canada Chrome Corporation intends on refiling aggregate permit applications which meet Aggregate Resources Provincial Standards with the Ministry of Natural Resources (MNR) at various sites located within the boundaries of it's staked mining claims.

In January, 2012, the MNR advised Cliffs Natural Resources that it would have to obtain the consent of Canadian Chromite to any disposition “to enable MNR to grant an easement over [the] lands”, as holders of the affected unpatented mining claims. Also, the Office of the Provincial Mining Recorder, of the MNDM was notified concerning the application to “ensure the priority to the surface rights for this application under the Public Lands Act, subject to any existing rights (e.g. unpatented mining claims in good standing).”

Surface rights may be granted to a mining operation if the surface rights are necessary for the carrying out of mining operations. Under subsection 175 (1), where required for or in connection with the proper working of a mine, the Mining Commissioner may make an order that gives an owner of a mining claim a variety of rights. For example, rights of way or passage through or over any land or water, and the right to construct, improve, maintain and use suitable roads, tramways, aerial tramways, channels, waterways, passages and other means of transit and transportation upon, through or over any land or water, together with such other rights of entry upon and use of land and water as may be necessary or convenient therefor; [s.175(f)] Since the prior right to surface rights belongs to the respondent and it's proposed mineral railway transport corridor is required for or in connection with the proper working of a mine, it seems reasonable and fitting for The Mining Commissioner to now vest CCC with that passage corridor right, as all the interested parties have appeared in front of the tribunal, no injury or damage has been caused to any other person and no compensation for that right is being sought from the respondent. This would then allow the Minister to determine the scope of the surface right so granted. [s.39(2)].

Since this case is a referral by the Minister of Northern Development and Mines to the OMLC tribunal pursuant to subsection 51(4) of the Mining Act, of an application under the Public Lands Act, understanding the scope of a section 51 hearing is necessary.

Scope: A Section 51 Hearing

The Ontario Mining and Lands tribunal makes decisions under the authority of the Mining Act, Conservation Authorities Act, Oil, Gas and Salt Resources Act, Lakes and Rivers Improvement Act, Assessment Act and the Aggregate Resources Act and is bound by the logical flow of their provisions.

While the Mining Commissioner has the power to grant easements under section 175 of the Mining Act, no such a power exists under section 51 unless an application for the disposition of public lands "lacks consent" (as in the Kamiskotia Ski Resorts Limited v. Lost Treasure Resources Ltd. case) or "consent is refused" by the mining claim holder. Section 2 of the Public Lands Act clearly states that only "the Minister of Natural Resources has control over the disposition of public lands and no such power has been assigned to the Mining and Lands Commissioner".

However, Section 105 of the Mining Act empowers the Mining and Lands Commissioner as the "judge of disputes, claims and questions concerning rights, privileges and interests conferred by or under the authority of the Act." The Mining Commissioner has concluded that the tribunal has the authority to make a decision on easement in this case, noting that "Under subsection 51(4), it [the Mining Act] could and should indicate that the MNDM is asking the Commissioner for a ruling as to whether an application for the disposition of public lands can proceed in the face of a lack of consent or a refusal to consent by a mining claim holder." (Order on Party Status)

Even though the mining court has the authority, it's adjudications within a Section 51 hearing "can only be dealing with a mining claim holder’s priority of right and the effect of that mining claim holder’s “consent or refusal to consent” to waive some measure of his or her priority vis-à-vis the surface rights of the mining claim." The Mining Commissioner must make "a very discreet determination as to a mining claim holder’s rights under the Mining Act and is not jurisdictionally empowered to consider wider issues encompassing the broader mining community and the proposed mining projects when making that determination." (Order on Party Status) To be sure, the mandate of the tribunal, under Section 51, is not to determine which method of transportation, road or rail, is better from an economic, ecological, or social standpoint.

The tribunal has also made the notion of compensation abundantly clear should easement be granted in this case; "A section 51 hearing under the Mining Act is one in which the tribunal is charged with the task of trying to determine if a claim holder who refuses to consent to disposition of the surface rights (to which it has a prior right) should be required to share in the use of those surface rights. This is the nub of the multiple use principle. There is no award of compensation by the tribunal to the claim holder should the tribunal find that it should be made to share surface rights usage." (Order On Preliminary Motion To Exclude Evidence) It should also be clear to the tribunal that while the applicant offered the respondent compensation for exclusive use of it's surface rights during initial negotiations, the respondent is not seeking compensation for those surface rights. Rather, Canada Chrome requires those surface rights to build a railroad over its mining claims. Any subsequent negotiations between the two joint-venture parties should focus on how they can work together to make Canada Chrome's transportation corridor available for the future needs of all affected mining companies and their neighbouring communities.

B. J. Barton, in "Canadian Law of Mining", of the Canadian Institute of Resource Law, 1993, page 199, was first to state that "The role of the Mining and Lands Commissioner in a section 51 hearing is to "weigh the interests of the parties in accordance with the principle of multiple use of public lands." Therefore, the application of the “multiple use principle” and the concept of “multiple use of Crown lands” in relation to this case requires examination.

The Multiple Use Principle

There have been few applications before the tribunal pursuant to section 51(4) of the Mining Act. Of those which have been heard, most involved disposal of only a small portion of the surface rights of the mining claims for an easement.

• Kamiscotia Ski Resorts Limited v. Lost Treasure Resources Ltd., (1984), involved the license of occupation for existing garages and a prescribed, small seasonal cross country ski trail use on an adjacent ski area which predated the claim where the respondent failed to appear. This was one of the first cases to consider principles relating to multiple use of Crown lands recommended by the Public Lands Investigation Committee (circa 1958) which set out a method of resolving, if feasible, conflicting uses or the prevention in a proper case of the subsequent acquisition of surface rights, through a hearing before the Commissioner. With the failure of the respondent to appear and provide evidence as to the nature of the mineral potential of the mining claim or the methods of exploration or the compatibility or otherwise of the proposed use of the surface rights, the tribunal was provided with no evidence to come to a finding that the disposition under the Public Lands Act should be refused.

• The Improvement District of Gauthier v. Egg, (1987), related to the proposed establishment of a park under the Parks Assistance Act and introduced the concept of priority of mining use within the multiple use principle in competing or conflicting economic sectoral land usage. Provisions of leases issued to the mining industry under the Mining Act were not designed for the purpose of creating a sole use of the lands for the mining industry. Never the less, of concurrent uses for public land, 'mining' takes the highest priority under the 'Multiple Use Principle'. Exceptions to mining priority are lands withdrawn from staking for purposes of Native land claims, provincial parks, or uses under subsection 32(1). The Public Lands Investigation Committee reported and subsequent legislative amendments recognized a concept of multiple use and it's application where the holder of the unpatented mining claim does not give his consent. "In weighing the interests of the applicant and the interests of the respondent, the evidence of the respondent has failed to convince the tribunal that the programs or the nature of the holdings by the respondent are such that the multiple use principle should not be applied in this case" and "incidental rights that arise in situations involving split ownership and accordingly the tribunal is of the opinion that the application should be granted."
  
  Ontario Hydro v. Nahanni Mines Ltd., (1993), the latter being the respondent, not consenting to disposition for a 230 Kv. hydro corridor easement through it's unpatented mining claims until the applicant gave compensation for a prior $16,954.00 land survey requested by the Minister of Northern Development and Mines to bring those claims to lease. Complicated by timing and registry of two previously granted unrelated easements, one by the applicant, through the respondents mining claims, the Commissioner granted easement, finding no evidence of conflicting use and ruled Ontario Hydro need not compensate Nahanni Mines as the land survey in question had no connection to the pending 230 Kv. hydro corridor easement application. The tribunal concluded that "to defend an application for release of surface rights, the respondent must show that the granting of the release would interfere with its exploration or extraction of minerals or other activity on the Mining Claims." Ontario Hydro v. Nahanni Mines Ltd.

• Northland Power v. Labine, (1996), the latter party being the respondent, not consenting to easement nor surface rights disposition for a transmission line, sought compensation for cut timber and loss of development of a quartz quarry where the applicant had previously installed a hydro line. Northland Power provided evidence that the amount of timber removed for the power line was small in size and quantity and had no commercial value. Northland Power argued that a hydro line was an "improvement" within the meaning of subsection 80(2). The applicant cited very similar cases where the mining court justified applying the principle of multiple use of public lands. Labine provided the tribunal with no geophysical surveys, no results of diamond drilling, nor evidence to show that easement, totaling ten percent of The Mining Claims, would negatively impact the exploration, extraction of minerals or further development of those claims. Under a section 51 hearing within the Mining Act, there is no provision allowing the tribunal to impose compensation. The commissioner granted easement. Northland Power v. Labine

• MNR v. Michael Gagne & Yvon Gagne & Spruce Falls Inc. (1999), where the claim holder did not consent to the disposition of surface rights. The principle of multiple uses of Crown land, upon which section 51 of the Mining Act is based, recognizes that there may be concurrent uses which may occur on Crown lands. However, the tribunal said "While section 51 is predicated on the multiple-use principle of Crown lands, such multiple use is not a given in all circumstances. The needs of all of the competing uses must be weighed before a determination will be reached. It cannot be taken for granted that applications for ordering consent to surface rights dispositions will be issued automatically." The MNR failed to ensure no staking took place pending the conclusion of a land swap that would ultimately establish the Missinaibi Provincial Park. Thus, to settle this case, the MNR made a payment of $31,000 as reimbursement for the Gagnes expenses, who were then agreeable to have the Mining Claims cancelled. Within section 51, "The tribunal has found that it does have jurisdiction where the parties consent or are in agreement to consider payment of compensation." (MNR v. Michael Gagne & Yvon Gagne & Spruce Falls Inc.)

• Gerry Roy v. Berry, Ken McCombe & the Minister of Natural Resources, (2000), where the applicant applied for a Land Use Permit pursuant to the Public Lands Act for a Sceptic Waste Disposal Site and Work Permit for purposes of connecting a waste trench construction to an existing aggregate pit located within the respondent's moderately substantial and contiguous mining claims. The respondent refused to provide his consent to the disposition of the surface rights, and asked for numerous conditions to be met by the MNR and Mr. Roy upon the granting of this application. Those same conditions were not requested within the Lautaoja Sceptic Disposal Site agreement, also on the Mining Claims. This case involved questions of environmental liability regarding ground water infiltration from the waste site and aggregate pits outside the tribunals scope within a section 51 hearing, and road access issues. Despite the respondent's evidence and expense regarding the validity and value of the minerals upon the claims, the tribunal found that all the various reasons were not valid for the denial of the surface rights disposal application sought. "To be a valid reason, Mr. McCombe must demonstrate that the proposed Sceptic Disposal Site will impede his ability to deal with his rights to his Mining Claim, being those rights set out in subsection 50(1). " (Gerry Roy v. Berry, Ken McCombe & the Minister of Natural Resources)

Most section 51 hearings are an exercise in the application of the “multiple use principle” and involve the concept of “multiple use of Crown lands”.

In this case, 2274659 Ontario Inc. v. Canada Chrome Corporation, each party seeks the use of extensive surface rights to establish an ore transportation corridor, an "other mining" activity, which is normally afforded the first and highest rank of priority for public land usage under the multiple use principle. The right of way usage in question falls outside the reach of subsection 32(1). No Native land claims are involved and the applicant is not proposing to establish a public park under the Parks Assistance Act nor any other use that would be a direct public benefit. The applicant is not applying for an "improvement" within the meaning of subsection 80(2). The Mining Commissioner would have to seriously consider the argument that the multiple use principle, when applied, does not determine which party has priority. Clearly, this case involves two parties competing for a "singular" mining use as defined under subsection 50(1). All things being equal, the party who holds the prior right to surface rights, the respondent, should be granted priority and easement denied.

Barring the "singular use, all thing being equal" argument to decide if prior surface rights must be shared, it would be necessary to look for guidance beyond the multiple use principle. The tribunal, by precedent, would need to determine if one party's use impinges upon the other, should easement be granted.

Infringement of the Rights Holder

The tribunal does have the authority and, by precedent, is directed to determine if any adverse economic impact would be imposed on the surface rights holder by the granting of easement. In order to make that determination, among other factors, a financial analysis and comparison of the proposed roadway and railway would be necessary.

In the case of Ontario Hydro v. Nahanni Mines Limited (1993), unreported, MLC: "... To defend an application for release of surface rights, the respondent must show that the granting of the release would interfere with its exploration or extraction of minerals or other activity on the Mining Claims." (Ontario Hydro v. Nahanni Mines Limited (1993)

Will the rights of the respondent be impinged if easement were granted? While both companies have a joint interest in the chromite project, KWG was concerned that the building of a [specialized high traffic, heavy load density] road would harm their joint interest by "impeding or delaying the construction of the railway and perhaps eradicating entirely the economics of the railway...putting [CCC’s] ability to maintain leases over the corridor at risk." (Order On Preliminary Motion To Exclude Evidence)

The 2013 Tetra Tech Road Rail Trade-Off Study concludes that "building a road corridor will adversely impact the development of the rail corridor by depleting the available and critical rock aggregate." There isn't enough affordable aggregate to build both a major road and a railway.

Conclusion

• Canada Chrome Corporation holds the prior right to surface rights through priority of recording and completion of the staked claims which remain in good standing.

• The staked claims are to be used for purpose of the “mineral industry” and follow provisions of the Mining Act to pursue claims to lease.

• The Mining Commissioner has the power to grant or deny easement in this case.

• An attempt to apply the “multiple use principle” must be exercised by precedence, however, after it's application, each party is ranked with equal priority of interests due to a singular mining use for the surface corridor right of way on the mining claims, which begs the question, “Who holds the prior right to surface rights?”

• Precedence also directs the tribunal to determine if the surface rights holder will suffer adverse economic impact should easement be granted.

• The impartial 2013 Tetra Tech Road Rail Trade-Off Study proves, but is not the sole proof, that Canada Chrome Corporation's rights would be impeded should easement be granted.

• Under subsection 175 (1)(f), the Mining Commissioner may make an order that vests Canada Chrome Corporation's rights of way, whereby the Minister of Natural Resources can then determine the scope of the surface right so granted.

"Over the years, learning from a considerable body of case law, those very able statutory officers of the legislation within my jurisdiction and parties and their representatives appearing in front of me, I have developed a healthy respect for the unique and breathtakingly complex entity which is the Office of the Mining and Lands Commissioner. I could not help but wonder that if I experienced such challenges to become informed, how were the lawyers acting on behalf of parties to regard this Office? My overriding concern has been for the parties and in particular the prospectors and junior mining companies in seeking to ensure that its long historic tradition and experience be permitted to remain intact." - Linda M. Kamerman, Mining and Lands Commissioner

While most importantly preserving the public's interests, Ontario's mining laws were also created and are continually revised to help protect prospectors and junior mining companies from a multitude of injustices and burdens, in light of the overwhelming odds against success in locating and developing a mineral claim to lease in these modern times. It is my opinion that easement rights should not be granted and Canada Chrome Corporation's rights of way be vested in the case of 2274659 Ontario Inc. v Canada Chrome Corporation.

Note from the Author: Laura Brown, B.B.A.

Fast tracked, sustainable, economic mining can co-exist with environmental conservation!

A "full review panel" for the Cliffs Chromite Project is required. I advocate environmental sustainable resource mining using the Regional Strategic Environmental Assessment model, R-SEA , (not sanctioned in EA legislation nor regulations in Canada) with the integration of SEA-CEA into CEAA 2012, as outlined in "Conceptual and methodological challenges to integrating SEA and cumulative effects assessment" (page 9) by Dr. Jill Gunn, Ph.D., M.C.I.P.

True R-SEA, coupled with the Ontario Far North Science Advisory Panel's advise of adopting a "Conservation-Matrix Model" (outlined in chapter 4), can eliminate unforeseen adverse effects of mining and other development projects on our environment. Piecemeal planning and decision-making could be avoided. A comprehensive access plan into the northern boreal forest area at a regional scale should establish limits on road densities, and on water access and wetland incursion in advance of development, rather than relying on after-the-fact mitigation and decommissioning.

First Nation Treaty Rights must not be infringed and revenue and benefits must be more fairly shared with all affected communities.

Canada should advance a plan called "The New Deal for Northern Ontario" to help improve the economic and infrastructure conditions for First Nations. The Ontario Northland Transportation Commission (ONTC) should be allowed to extend the Ontario Northland Railway (ONR) network to serve the development of the Ring of Fire.

Ontario should transfer the ONR as a going concern to the James Bay & Lowlands Ports Authority.

An agency under Mushkegowuk and Matawa First Nations leadership could be created under the banner of the James Bay & Lowlands Ports Authority to take control of the ONTC. CCC's railroad right-of-way could be transferred under such a plan.