The Yukon Quartz Mining Act is being strip-mined.
Under the guise of modernizing the act, many of the rules on quartz mining are being shuffled from the act into regulations to be approved by cabinet at a later date.
Royalty rules have undergone the biggest switch from law into regulations.
The royalty section in the act will shrink from 26 subsections to 19.
Much of it was written for mining in the 1920s.
The aim is to make the rules more responsive to changes in the industry.
But the act isn’t just getting an update from 90 years ago. “Modernizing” means a totally new way of governing the quartz mining industry.
A consultation process determined quartz mining requires less legislative oversight and should be more of a bureaucratic process approved by cabinet.
The proposed amendments are poised to undergo third reading in the legislature.
While all three parties agreed the act needed to be modernized, the changes leave most of that modernizing to a future date. And it isn’t clear exactly what those changes will be.
In the original act, subsection 26 dealt with the power of the cabinet to enact new regulations on royalties as times required. A mere paragraph long, it was vague and did not specifically outline the types of changes that could be made.
In the amendments, cabinet can approve virtually any changes to the royalty regimes without going through the legislature.
First, cabinet can approve regulations that would alter the way a royalty is calculated and determined in the first place.
“The royalty in the quartz mining act is a percentage of the value of the ore produced out of the mine,” said Robert Holmes, director of mineral resources for the department of Energy, Mines and Resources.
“The value means profit, but profit is a little misleading. It’s revenue minus the costs of operations.”
But now, instead of having the details of that cost in the act, they will be determined through regulations.
“We are clarifying our calculations of what it means,” said Holmes.
The department has gone through a lot of research to determine the regulations, he said. And public input will be solicited at some point.
But cabinet will now be the final judge on royalty rules instead of the legislature.
The amendments also propose that royalty payment rules will now be determined through regulation.
And those regulations can determine whether a mine files a return with the department, or whether it must keep official records.
Many old sections of the law are being repealed as they move into regulations.
The cabinet now reserves the power to change regulations “specifying the costs, expenses or other matters to be taken into consideration in determining the values of the output of a mine.”
Before, the act outlined what costs could be deducted off the value of the ore so that a royalty would only reflect a percentage of profit.
But now those deductions will be regulations, not law.
Some of the deductions became needlessly complicated over time, such as the income tax deduction, said the consultation paper.
Others were relics of a bygone era.
Deductions for pre-production exploration and mine development costs were once deducted only in the first year the mine produced ore.
But because exploration has become a more difficult process, those costs should be determined and deducted in amortized amounts over a longer period of time, said the consultation paper.
In making the pitch to change the deductions, the government has the support of opposition parties.
But along with this renewal comes a new modus operandi in quartz mining rules — deductions can be added and removed much more easily.
The legislature is effectively ceding power to the department of Energy, Mines and Resources and its minister, allowing them to make changes.
Regulations will also determine the newest deduction, the community economic development expense deduction. It can be given to any company that offers support to a community.
The details of what that means are still being worked out.
Among the many laws repealed, there is no longer the requirement that statements by mining operators be made under oath to the minister.
The law no longer gives the minister the right to ask for any information from a mine operator.
On top of this, mining operators are no longer required to keep proper books by law.
But they may be required to do so through regulations.
If changes need to be made to regulations, they can be initiated from almost anywhere.
“Regulatory changes are approved at the cabinet level,” said Holmes. “How that gets initiated is like any changes. It can come from the public, the minister, etc.”
But unlike the amendments being decided upon soon, they won’t need to go through the legislature.
Contact James Munson at jamesm@yukon-news.com