Mineral Administration Registry Saskatchewan System. Regulatory Overview

Transcription

1 Mineral Administration Registry Saskatchewan System Regulatory Overview Prepared for: Law Society of Saskatchewan Focus On: Corporate Commercial Law Seminar Prepared by: Doug MacKnight Executive Director, Lands and Mineral Tenure, Ministry of the Economy May 15, 2013

2 Table of Contents 1. Introduction Regulatory Framework Development of the MARS System Registry Operation Agency Mineral Disposition Parcels: Understanding GIS Non-conforming Legacy Mineral Dispositions Electronic Transfers of Dispositions Recording of Work Expenditures and Groupings Re-opening of Mineral Lands Disputes and Other Registered Interests Future Electronic Disposition Registries

3 1. Introduction On December 6, 2012, the Government of Saskatchewan launched the Mineral Administration Registry Saskatchewan (MARS) system. MARS is the Ministry of the Economy s (ECON s) first web-based system for issuing and administering mineral dispositions under The Crown Minerals Act (the CMA). The implementation of MARS required amendments to the CMA as well as a new set of regulations to govern the operation of an online registry system. This paper sets out a number of key legislative and regulatory concepts that legal counsel may need to consider when advising clients about the new system. It is recommended that legal counsel, as well as their clients, view the online interactive training modules available at before consulting on the MARS system. Questions can be directed to the MARS helpdesk at (306) Regulatory Framework At present, the MARS system only applies to Crown mineral dispositions issued under The Mineral Tenure Registry Regulations (MTRR). The MTRR, which became effective on December 1, 2012, updated and replaced all those portions of The Mineral Disposition Regulations, 1986 (MDR) dealing with the issuance and administration of mineral permits, claims and leases. These dispositions apply to gold, silver, diamonds, base metals and precious metals. Only the royalty schedules contained within the MDR were retained as part of the amendment process. These will be replaced in the near future with a new set of regulations dealing exclusively with the assessment and payment of Crown mineral royalties (other than oil and gas). The regulatory authorities governing the MTRR, as well as a variety of other supporting statutory provisions, are found throughout the CMA. However, much of the MARS system relies on amendments to the CMA that also became effective on December 1, These are found in Part VII of the CMA dealing with the establishment of a Crown mineral electronic registry. Section states: Implementation date and application The Lieutenant Governor in Council may, in the regulations, prescribe an implementation date for Crown minerals or classes of Crown minerals on and after which 3

4 this Part, or any prescribed provision of this Part, applies to the Crown minerals or the classes of Crown minerals. 2010, c.9, s.25. In the case of MARS, the implementation date set out in subsection 3(3) is December 1, From and after that date, all mineral permits, claims and leases including pre-existing legacy dispositions are administered pursuant to the MTRR. 3. Development of the MARS System A number of factors contributed to the decision of the Government of Saskatchewan to develop the MARS system. MARS replaced a system of physical ground staking of claims in unsurveyed areas which had existed in Saskatchewan for over hundred years. The preponderance of mineral claims issued by the Crown occur in northern Saskatchewan. The marking out of claims can be very expensive especially in remote areas and the system is prone to disputes over the priority of application and the proper marking and placement of claim posts. A staking rush in the early half of the last decade also highlighted the challenges with the traditional claim staking system. Clients experienced significant delays in the processing of claim applications owing to the manual nature of this process. Clients were waiting up to six months to receive their claim certificates owing to the high administration demand on a limited number of government resources. While staffing levels were adequate for normal business activities, these resources were hard pressed to deal with sudden increases in land acquisition activities. These cyclical land rushes are endemic to the industry and can be triggered at unpredictable times owing to discoveries of mineral deposits. At the same time as ECON was experiencing these operational pressures, other competing jurisdictions, most notably British Columbia, had taken steps to replace their own ground staking systems with new online systems for issuing mineral tenure. All of these new systems were taking advantage of technological advances in the area of web-based Geographic Information Systems (GIS). These are the same types of technologies and datasets that support the operation of Saskatchewan s Land Titles Registry and Land Surveys Directory (the LAND system) which was implemented in 2002 by the Information Services Corporation of Saskatchewan (ISC). The decision by ECON to partner with the ISC reflects the close integration of the MARS system 4

5 with the LAND system. This relationship continues today. ISC hosts the MARS system on behalf of ECON and supplies key GIS datasets used by the application. 4. Registry Operation Like the LAND system, MARS is the legal registry of mineral permits, claims and leases. No certificates for mineral dispositions are issued by the system. Instead, a disposition is registered in MARS once it is issued by the Minister. This process of approval followed by registration is found throughout the MTRR. In order to use MARS, a client must set up an account with a user name and password. In the case of a body corporate, MARS requires that the user be registered under The Business Corporations Act. The system will automatically check ISC s corporate registry dataset to determine whether a valid identity number exists at the time of registration. Corporate clients without a valid identity number will be unable to use the system. Individuals can, however, register with the system by providing personal information listed in the regulations. There is no residency requirement for individuals to use the MARS system or to hold a disposition. It is vital that clients keep their login information up-to-date. Section 12 of the MTRR lists the information that must be submitted to the registry in order to become a registered user. One of these items is a current address of the client. All legal notices issued by the MARS system are sent to this address. Section of the CMA states that an electronic notice is deemed to be served five business days after it is sent. Clients are therefore advised to ensure that their addresses are up-to-date and that their accounts are being actively monitored. MARS is programmed to issue notices to the holder(s) of a disposition every time the Minister records an application or registers a transaction. 5. Agency One of the most important innovations brought about by MARS is the introduction of an on-line agency system. A registered user of the system can assign agencies to another person for purposes of carrying out a variety of transactions including acquiring new dispositions, transfers and expenditure submissions. The agency provision is set out in section 14 of the MTRR. It states: 5

6 Agents 14(1) A registered user may designate another person to act as an agent to conduct specified transactions within the registry on the registered user s behalf. (2) On acceptance of the designation by the agent in the registry, the agent is authorized to conduct the transactions with respect to which the registered user has designated the agent. (3) The designation of an agent does not relieve the registered user of any responsibility to comply with the Act or these regulations. (4) The designation as an agent may be terminated by the registered user or the agent effective as of the registration of the termination of the agency. 30 Nov 2012 cc-50.2 Reg 27 s14. The agency function allows the owner of a disposition to assign responsibilities for all, or a limited set of transactions, to a staff member within the organization or to person outside the organization such as their general counsel or land agent. Agency can be revoked at any time. 6. Mineral Disposition Parcels: Understanding GIS As noted above, MARS relies on GIS technology to define the spatial extent of a new mineral disposition recorded in the registry. The building blocks of mineral land which comprise a disposition are referred to as mineral disposition parcels. Two types of mineral disposition parcels are used by MARS depending on whether they are surveyed or unsurveyed. Together these two classes of mineral disposition parcels comprise the electronic parcel mapping system which is the basis for the MARS application. Surveyed Parcels In the surveyed portion of Saskatchewan, MARS relies on the cadastral parcel mapping system (the mineral cadastral ) established under The Land Surveys Act, 2000, to define the available mineral disposition parcels. These electronic parcels spatially align with the surveyed boundaries of mineral parcels for which a title or abstract exists in the Land Titles Registry. For technical reasons, MARS is currently only able to use locations where 100% of the mineral rights are owned by the Crown. Where necessary, split right locations where the Crown only owns a portion of the minerals will be added to the adjoining disposition through a special application process set out in section 10 of the MTRR. It is expected that this will only be necessary at the time of leasing. 6

7 In the case of the mineral cadastral, the physical location of a boundary is determined by the physical location of the monuments. Intervening road allowances located west and south of the parcel are deemed to be included in the adjoining mineral disposition parcel by virtue of section 7 of the MTRR. One of the technical challenges with implementing MARS in the surveyed area was finding a way to aggregate numerous unconnected mineral parcels into a single mineral disposition. Physical breaks between mineral parcels occur between quarter sections because of intervening road allowances and within quarter sections owing to surveyed subdivisions (e.g., water bodies, railway rights of way). ECON relied on the capabilities of GIS to spatially determine distances between parcels to overcome this challenge. Parcels in the surveyed area are deemed to be associated in the MTRR for purposes of inclusion in a single disposition if they are located: within the same quarter section; or, within quarter sections whose boundaries are located within 50 metres of each other. The 50 metre rule addresses all road allowance situations including those locations where adjoining townships are offset from each other owing to earth curvature. Unsurveyed Parcels Unsurveyed mineral parcels proved to be the most challenging GIS parcels to define in law. This was especially important since the most of the new mineral dispositions issued using MARS are expected to be in the unsurveyed portion of Saskatchewan. Prior to MARS, the system for issuing mineral tenure relied on the physical ground staking of land to mark out claims. In the GIS world, the system required polygons with the corners defined by highly accurate electronic coordinates which clients could use to find the boundaries of their dispositions on the ground using GPS technology. These coordinates would, in turn, inform?the actual surveying? of the mineral lands in accordance with The Land Surveys Act, 2000, should the physical boundary need to be defined with absolutely certainty. These types of surveys will likely only occur where 7

8 a property advances to development and the need to physically demark the property with any adjoining lands becomes an absolute necessity. The MARS system relies on the SaskGrid Township Fabric Map (the SaskGrid) developed by ISC to define the location of new mineral disposition parcels in the unsurveyed area. The SaskGrid incorporates both the southern township survey and a theoretical projected survey (northern) into a single, highly accurate GIS dataset. The SaskGrid includes a Legal Subdivision (LSD) feature layer which is based on the old legal subdivision concept of 16 divisions within a surveyed section. Each LSD is approximately 16 hectares in spatial extent. The MARS system uses the LSD feature layer to demark the boundaries of mineral disposition parcels in the unsurveyed area. These LSD parcels can be aggregated into a single disposition based on the size and dimension rules set out in the regulations. Dispositions can be divided and partially surrendered on the basis of these parcels. The minimum size of a disposition is one LSD. From a legal standpoint, the issue for ECON was finding a way to give the LSD feature layer the legal status it requires to serve as a basis for issuing mineral rights to a disposition holder. This problem was solved in two ways. First, clause 27.56(d) and (e) of the CMA provides the Lieutenant Governor in Council with the authority to adopt through regulation an electronic parcel mapping system that defines the mineral disposition parcels. Second, section 5 of the MTRR then adopts both the Cadastral Parcel Mapping System (surveyed) and the SaskGrid (unsurveyed) for this purpose. This section states: Electronic parcel mapping system established 5(1) The electronic parcel mapping system is established. (2) The electronic parcel mapping system consists of: (a) the cadastral parcel mapping system; and (b) the SaskGrid system. 8

9 Section 6 goes on to set out the use of the LSD parcels for unsurveyed portions of the province. It states: Mineral disposition parcels 6(1) The electronic parcel mapping system is to be used to determine the boundaries of mineral disposition parcels. (2) For the purposes of clause 27.56(e) of the Act, the following are mineral disposition parcels for which a mineral disposition may be issued: (a) mineral parcels that are described in the cadastral parcel mapping system; (b) parcels of Crown mineral lands described in the legal subdivision feature layer of the SaskGrid except any legal subdivision parcel whose boundaries overlap or coincide with a mineral parcel mentioned in clause (a). (3) For the purposes of determining the mineral disposition area of a mineral disposition parcel, the surface area of a mineral disposition parcel must be calculated using the dimensions of the mineral disposition parcel recorded in the electronic parcel mapping system. 30 Nov 2012 cc-50.2 Reg 27 s6. The effect of section 6 is to establish a hierarchy of parcels which is programed into the MARS application. Where a survey exists the mineral disposition parcel is the surveyed parcel defined by the cadastral parcel mapping system established under The Land Surveys Act, In rural areas available for dispositioning, this is typically a quarter section. In unsurveyed areas, the mineral disposition parcel is a SaskGrid LSD polygon which are given legal status under the CMA and the MTRR. The electronic corners of these polygons are stored in MARS and would be used by a surveyor to establish a surveyed boundary. Regardless of the type of parcel, the area (measured in hectares) is the area determined mathematically by the GIS software. This value is used to establish work expenditure obligations and rentals (where applicable). 7. Non-conforming Legacy Mineral Dispositions Unlike other jurisdictions such as British Columbia, the Government of Saskatchewan, in consultation with the mining industry, chose not to require its existing disposition holders to convert the boundaries of mineral dispositions staked in the unsurveyed area to the new mapping system. Instead, dispositions which did not conform to the new mapping system (referred to as nonconforming legacy dispositions ) were brought into the system based on an electronic map prepared by ECON with reference to the original hand-drawn staker sketches. The corners of these polygons align to the expected on-the-ground location of the claim posts. Only the change of direction of the claim boundary as shown on the staker sketch, and not every intervening post, is rendered on the map. 9

10 The decision not to require nonconforming legacy disposition holders to convert their dispositions to the LSD grid meant that a way was needed to confirm the boundary of these dispositions in the new electronic registry. Staker sketches are notoriously unreliable documents for knowing the true on-the-ground location of a claim post. These could only be discovered with a physical examination of the claim boundary. In some cases, legal certainty could only be achieved through an actual survey of the claim by a Saskatchewan Land Survey. From a legal standpoint, the challenge for the ECON was to find a low-cost way to make the electronic coordinates, stored in MARS for the non-conforming legacy dispositions, the legal boundary of these dispositions. Essentially, this meant replacing the old on-the-ground claim posts which defined the boundary of non-conforming claims and leases with either: electronic coordinates stored in the MARS application based on the staker sketches; or, survey monuments recorded in the cadastral parcel mapping system and spatially rendered in MARS. The boundary confirmation process set out in section 25 and 26 of the MTRR was the regulatory solution. These sections state: Certificate of boundary confirmation 25(1) A holder of a non-conforming legacy disposition may apply, before January 1, 2015, to the minister in an approved form and manner to have the boundary of a mineral disposition confirmed if the boundary of the mineral disposition has not been surveyed in accordance with clause 27.39(2)(a) of the Act. (2) On receipt of an application pursuant to subsection (1), the minister may issue a certificate of boundary confirmation to a holder of a non-conforming legacy disposition if the entire boundary of the disposition is verified using one or more of the following methods: (a) for any portion of the disposition boundary that is shared in part with another non-conforming legacy disposition, the boundary is verified by all holders whose legacy dispositions are affected by the position of the common boundary and those holders agree on the position of that boundary and submit evidence of the agreement in a form and manner satisfactory to the minister; (b) for any portion of a disposition boundary that is not shared with another nonconforming legacy disposition, the boundary is verified by the sole holder affected by the position of the boundary and that holder declares the location of the boundary in a form and manner satisfactory to the minister; and 10

11 (c) for any portion of a disposition boundary that has been surveyed, the boundary is verified by a legal survey and the survey is submitted to the minister. 30 Nov 2012 cc-50.2 Reg 27 s25. Survey cost as assessment work 26(1) The holder s share of the cost of surveying the location of the boundary of a nonconforming legacy disposition may be submitted for registration by the holder as an expenditure in accordance with section 61 if the cost of establishing the boundary has not been previously claimed as an expenditure. (2) If a certificate of boundary confirmation is issued without a survey, the holder s share of the reasonable costs associated with inspecting the location of the boundary may be submitted for registration by the holder as an expenditure in accordance with section 61 if the cost of establishing the boundary has not been previously claimed as an expenditure. 30 Nov 2012 cc-50.2 Reg 27 s26. The practical implications of these sections are as follows: 1. A holder may apply to confirm the boundary of a disposition, as represented by the electronic coordinates stored in the registry, at any time for boundaries which are not shared with other parties. 2. If the boundary is shared, the application to confirm the boundary needs to show the agreement of all parties to the common boundary. 3. If an agreement cannot be reached, either party may request a legal survey to establish the common boundary based on the physical location of the posts on the ground. 4. Finally, if no actions are taken, the electronic coordinates stored in the registry as of January 1, 2015 will prevail over the posts on the ground. After January 1, 2015, the boundary of the disposition will be determined based on the electronic coordinates stored in MARS or a survey monument on the ground determined in accordance with The Land Surveys Act, These survey monuments will form part of the cadastral parcel mapping system and will be used to establish the boundary coordinated in MARS. To facilitate the boundary confirmation process, ECON will be accepting reasonable survey costs as a work expenditure for holding the disposition. In addition, reasonable costs associated 11

12 with confirming the boundary such as a GPS survey or field inspection conducted by a person other than a Saskatchewan Land Surveyor will be accepted by the ECON. 8. Electronic Transfers of Dispositions Transfers of dispositions, or fractional shares of dispositions, are easily executed within MARS using electronic forms. The process involves three steps: 1. The disposition holder, or their agent, selects the disposition that is the subject of the transfer and enters the required information on the transfer form within the MARS application. Upon completion, the person submits the transfer to the MARS system which will immediately send out a transfer notice to the transferee via an The transferee, who must be a registered user of MARS, will then confirm their acceptance of the transfer within MARS by clicking the acceptance link. 3. Once the transferee has accepted the transfer, the Minister will then register the transfer in the registry. Although this is a routine activity, the action of registering the transfer requires the MARS Administrator to physically accept or deny the change in the registry. Denial might occur where the MARS Administrator is concerned that the system is not operating properly or there is other issues that might call into question the validity of the transfer. This could include further communications with the parties to ensure that everything is in order. Part X of the MTRR sets out the provisions governing this process. Three points are worth noting: The minimum undivided interest that can be transferred to another person is 1/20 th of the mineral disposition. The transfer is automatically terminated after 10 business days if the transferee (registered user) does not accept the transfer. No transfer can occur where there are outstanding business activities being processed by MARS such a surrender, division, consolidation, conversion or review of work expenditures. 12

13 9. Recording of Work Expenditures and Groupings One of the most significant business process changes with MARS is the method that holders now use to submit records of work expenditures. In the past, holders submitted paper certificates of expenditures detailing the work performed to hold a claim. These submissions are now done online using a fill-in form. As part of the process, the registered user is issued an assessment work number (AWN) by MARS which is used to track the submission through the approval process. The AWN must be submitted with the geological work report. The record of expenditure form allows the holder to carry out two important activities: Assigning expenditures to multiple dispositions which are affected by the same exploration work report; and, Transferring expenditures from one disposition to another associated (contiguous) disposition through a process referred to as grouping. The expenditure grouping process which in the past was complex and prone to errors has been greatly simplified by MARS. MARS will automatically check to ensure that the proposed grouping meets regulatory requirements. One rule that has not changed is the requirement for the work report to be received at the Ministry s?? office no later than 90 days after the assessment work period in order?to be credited to that period. Submitting the online record of expenditure on or before the 90 th day is not sufficient to meet this requirement. The work report, together with the AWN, must be physically delivered to ECON in order to meet the 90 day requirement. 10. Re-opening of Mineral Lands Under the previous claim staking system, ECON was required to publish a notice on its web site identifying the date and time for which mineral lands included in a lapsed claim would be available for staking. This system has been replaced by a re-opening board that is accessible on the MARS web site. The re-opening board includes an interactive map so clients are able to easily view the location of the lapsed disposition with respect to other dispositions. 13

14 The reopening process is governed by section 88 of the MTRR. It states that: Reopening of mineral disposition parcels 88(1) Subject to subsection (3), any mineral disposition parcel that includes Crown minerals or Crown mineral lands that were, in whole or in part, subject to a mineral disposition shall not be available for disposition until at least 10 business days after the minister has published a notice of reopening for the mineral disposition parcel. (2) The notice of reopening published by the minister pursuant to subsection (1) must contain: (a) the date of the reopening; (b) the mineral disposition parcel or parcels included in the reopening or the mineral disposition number of the former mineral disposition that contained the mineral disposition parcels to be reopened; and (c) any other information that the minister considers relevant. (3) Subsection (1) does not apply to any mineral disposition parcel that may have been formerly disposed of pursuant to The Mineral Disposition Regulations, 1986, or any predecessor to those regulations, but that is not, on the implementation date, identified in the records of the ministry as a lapsed mineral disposition. 30 Nov 2012 cc-50.2 Reg 27 s88. As noted in subsection 88(1), a lapsed claim must appear on the re-opening board for at least 10 business days before it is available for disposition. 11. Disputes and Other Registered Interests Under the MDR, disputes over the order of staking of a claim for the same unsurveyed area were common. The MARS system was designed to eliminate these disputes by registering new claims or permits in the order in which they were recorded in the computer system. As such, the notice of dispute (NoDs) process has been eliminated. Only NoDs registered against claims registered under the MDR were carried forward into the new system. In contrast, ECON is still required to register liens against mineral permits, claims and leases under the provisions of The Builder s Lien Act. Notations showing the existence of a lien appear on search abstracts generated from the MARS application. These notations are added by the ECON s Recorder of Liens. For more information on how to record liens, please contact the Mineral Rights Services Unit at (306) At present, the MARS system does not provide for the recording of interests other than liens against a mineral tenure. ECON is examining the potential of creating a full document registry 14

15 under the CMA to accommodate the registration of other interests such as security notices. In the interim, ECON will continue to store documents on its files, with the consent of the holder, related to other legal interests. These have been scanned to an electronic format to assist in the conduct of searches. Contact the MARS Helpdesk for information on how to obtain a document search. 12. Future Electronic Disposition Registries As noted above, the MARS system is ECON s first online mineral disposition registry. It is expected that other types of mineral dispositions such coal, quarriable substances and subsurface minerals (potash) will be added to MARS overtime. At present, ECON s effort with respect to MARS focuses on three areas: addressing technical deficiencies which have been identified during the initial stages of implementation; improving performance (speed) of the mapping application during claim acquisition; and, adding enhancements to the system based on industry feedback such as a simplified method for uploading work expenditures and reports to MARS. Along with these activities, ECON initiated on April 1, 2013 a major project to establish an electronic registry for issuing and administering petroleum and natural gas tenure (tentatively referred to as ptenure ). This project is part of the multi-year Process Renewal and Infrastructure Management Enhancement (PRIME) program which entails rebuilding many of the major data systems involved in regulating the oil and gas industry. It is expected that the ptenure system, which is scheduled to be launched in 2015, will build off many of the same design concepts that underlay the MARS application. The ptenure system will also require the development of new technologies and data systems which will be used as part of future MARS enhancements. One of these is an instrument registry used for recording interests against Crown dispositions. 15