SOMBA K'E/YELLOWKNIFE - The territorial government and the Department of Indian and Northern Affairs are supporting a diamond mine's bid to cut funding to the watchdog tasked with monitoring it.

A letter suggesting ways to resolve a budget dispute between Diavik and the advisory board that monitors the environmental impact of the diamond mine was co-signed by Diavik, INAC and the GNWT and sent to the five aboriginal communities that sit on the board. - NNSL file photo

Diavik Diamond Mines Inc. sent out a letter to the leaders of five aboriginal communities who are a part of the Environmental Monitoring Advisory Board on Nov. 5.

The letter is signed by Trish Merrithew-Mercredi, regional director general of Indian and Northern Affairs, Gary Bohnet, deputy minister Environment and Natural Resources and Kim Truter, president of Diavik.

The letter includes several recommendations, including using the money left over from previous budgets to reduce the money Diavik will give the advisory committee in the 2009-2011 budget period and the 2011-2013 budget period, if funds still remain. That surplus amounts to $360,194. The other two recommendations concern reviewing the budget and assessing the environmental agreement that sets the terms for the board.

The advisory board is a non-profit organization that is supposed to operate at an arm's length from the mine, as an independent public watchdog. The board monitors the impact on land, air, wildlife and aquatic resources at the mine site on the East Island in Lac de Gras, NWT.

The board's funding comes from Diavik, which contributes approximately $600,000 per year. The federal and territorial governments contributed start-up costs when the Advisory Board was created in 2000. They spent $150,000 and $50,000 respectively in the first two years.

Previous disputes over funding to the board came up when Diavik planned to shut down operations for six weeks due to the downturn in the economy and wanted to shut down the monitoring process at the same time. The board turned down that proposal last May.

Doug Crossley, chair of the board, said the unused funds from past budgets had resulted because there was a shift in paying consultants to employing full-time staff. He also said money that wasn't used was invested, increasing it's value. Crossley said the dispute about funding has been debated for 14 months but in nine years he's worked with the board, Crossley said he's never received a letter with those three signatories.

"The issue is no surprise but when we got this revised (letter), determined to be an appropriate solution, from three of the non-aboriginal parties to the agreement, it really took us aback," he said, in an interview from Cambridge Bay. "To receive a letter from two supposedly independent parties, seemingly in agreement with Diavik about how a solution could be addressed and the actual characteristics that would make up the solution, that surprised us."

He said previous to that letter, the dispute was always between Diavik and the board. Crossley had hoped INAC would consider funding a third party mediator.

"We thought (INAC) might be the most appropriate party to consider hosting a mediation resolution decision toward a solution. That would involve seeking a third party to review the file, have a look at the paper work and interview the two parties involved in the dispute," he said, adding INAC was in the best position to foot the bill.

Teresa Joudrie, director of resources and environment with INAC, said it isn't unusual for the federal government department to sign a letter with another co-proponent.

She said the suggestions didn't come from Diavik, but were originally brought forward in a letter to all the parties from the Kitikmeot Inuit Association. Along with Diavik and the GNWT, INAC expanded on those suggestions, she said.

"We're not trying saying it's the best response. What we're doing is we're bringing forward one of the recommendations," she said. "We wanted to find out from the rest of the parties if they felt the same way."

She said the letter was signed by three original funding partners and said since they're all parties to the same agreement, she said it wasn't unusual for INAC to sign a letter with Diavik.

"It depends on what the project is and what the subject is but it's not unusual for us to send letters with other co-proponents," she said.

Joudrie said nothing would be finalized until the many parties respond to the letter. They have a Dec. 4 deadline. After that, INAC minister Chuck Strahl will decide how the dispute will be resolved.

"INAC is ultimately the decision marker for the budget," Joudrie said. She said she didn't think endorsing the recommendations in the letter eroded the minister's independence.

The GNWT, also a signatory on the letter, declined to comment on the issue.

One of the responses to the proposed budget has already come from the board's executive. Crossley said he didn't dispute all four recommendations in the letter, but said any challenge to the board's independence had to be avoided.

"From an environmental monitoring view, we'd be dead in the water," he said.

He hopes all the members of the board continue to discuss the issue before any funding changes are finalized.