A draft agreement lays out the groundwork for Ottawa to eventually hand control over all federally administered land, water and other resources to the government of the Northwest Territories.
CBC News has obtained a copy of a confidential agreement-in-principle that details how the devolution of powers, which has been under negotiation for decades, could take place.
Federal and territorial negotiators are recommending the agreement to Indian and Northern Affairs Minister John Duncan and N.W.T. Premier Floyd Roland.
The negotiators are also encouraging the N.W.T.'s aboriginal groups to sign the agreement-in-principle and join in on the subsequent talks.
"There's still quite a lot of work that would need to be done, so the agreement in principle is just that — it is draft," Roland told CBC News on Friday.
"If we feel we can sign off on this we move to the next stage, and that would be to enter into a final series of negotiations."
Under the proposed agreement, the territorial government would be able to pass its own laws with regard to land and resources. However, that control would not extend to lands that N.W.T. aboriginal groups own through land claims.
The agreement also lays the groundwork for the sharing of resource royalties between the federal and N.W.T. governments and the territory's aboriginal peoples.
It proposes a one-time $23-million grant to the N.W.T. government to cover the transition of powers, as well as a $4-million grant to aboriginal governments for transitional expenses they might incur.
The agreement proposes an annual transfer to the Northwest Territories to cover the costs of administering oil, gas, land, water and other resources.
That transfer would amount to just over $65.3 million a year, which is roughly how much the federal Indian and Northern Affairs Department currently spends to perform those same functions.
At the same time, the agreement would reduce the federal government's operating grant to the territory by 50 cents for every dollar in resource revenues the territorial government earns.