Rethinking the Role of Aboriginals in Resource Development - Four Waves, Four Conditions

Article originally published in Oilweek Magazine's July 2015 edition. Digital editions of their magazines can be found here.  

How a new age of aboriginal resurgence could help - or hinder - crude oil pipeline developments

By: Sebastain Gault

The Canadian oilpatch was dumbstruck by incoming Alberta Premier Rachel Notley’s pre-election announcement that her government would withdraw support for Enbridge’s Northern Gateway Pipeline.

“It’s not worth it,” she flatly told the Calgary Herald with respect to this critical solution to the industry’s acute market-access predicament. She justified her position by suggesting that she considered First Nations opposition intractable and noting the “intense” environmental sensitivities in British Columbia.

Shortly after the NDP’s orange crush started giving Calgary energy executives the blues, the Pacific Coast band of Lax Kw’alaams unanimously rejected the $1.1 billion offer from Petronas-led Pacific Northwest LNG to site its liquefaction terminal on Lelu Island near Prince Rupert, B.C. 

As Canada’s oil and gas export industry starts diversifying from the shrinking American market to the expanding Asian markets, getting aboriginal buy-in for the requisite infrastructure has proved extremely difficult. Some businesspeople and media even regard Canada’s resource economy as a victim of hostage-taking by obstructionist, if not extortionist, demands.

PARADIGM SHIFT

There’s something significant going on in the aboriginal world, which needs to be viewed with a historical frame of reference. From demonstrations of indigenous identity (Idle No More) to landmark court decisions regarding un-extinguished land title (Tsilhqot’in Nation v. British Columbia) over thriving aboriginal businesses, First Nations are experiencing a profound transformation of their social, economic and political structures, leading some observers to characterize the growing commercialization of First Nations as “red capitalism.”

First Nations communities may still rank at the bottom of social and economic indices, but a resurgence is underway that merits being called a comeback, as author John Ralston Saul describes it in his recent book The Comeback: How Aboriginals are Reclaiming Power and Influence.

The direction of the comeback is clear. Past legislation like the Royal Proclamation of 1763 and, post-Confederation, the Indian Act of 1867 greatly lessened the economic and political autonomy of aboriginal societies. “We have begun to rebuild the legal and administrative foundation to support market on our lands,” says aboriginal property rights crusader and visionary Manny Jules. “Once we restore our property rights to our lands, I believe we will unleash a wave of First Nations creative and entrepreneurial spirit.”

The big goals – political self-determination, improved intergovernmental relations, cultural and linguistic renaissance, re-invigorated self-esteem – require First Nations to achieve economic self-reliance, and progress toward these goals is evident in many places.

Innovation in real estate law is enabling some aboriginal citizens and corporations to sidestep century-old rules against on-reserve property ownership. Like mainstream Canadian homeowners, some can now borrow against their property as collateral.

Some bands are lessening dependency on federal transfers by implementing in reserve taxation. Others are tapping bond markets in order to self-fund market-building services and infrastructure projects on their reserves.

In short, proponents of development who don’t take account of this unfolding paradigm shift and continue to ply the old “beads and trinkets” approach do so at their peril. 

STRATEGIC OPPOSITION

Other key comeback milestones include the Supreme Court of Canada’s Haida Taku River and Mikisew Cree decisions of 2004 and 2005. These stipulated that the Crown had a “duty to consult” or “accommodate” wherever government-sanctioned activities might adversely impact aboriginal or treaty rights.

When advancing projects within tight geographical limits, industry has largely come to grips with the ruling. But University of Calgary professor Tom Flanagan points out how difficult things get with pipelines that cross traditional territories of multiple First nations. Each stakeholder tends to hold back, suspecting that the last to sign up get the best terms. As a result, the duty to consult in many circumstances results in First Nations gaining a de facto veto on development, something the judgements had not intended. 

Douglas Bland, former chair of defence studies at Queen's University, recently published Time Bomb: Canada and the First Nations, which imagines what a civil war - like rebellion of disaffected aboriginal groups would look like - and how to prevent it.

Mainstream Canadian society is largely oblivious to the frustration and bitterness brewing on reserves among aboriginal people – especially among the burgeoning youth population – who feel excluded from the wealth and opportunity enjoyed by most Canadians. Bland explains how a few attacks on the commodity-moving infrastructure – railways, pipelines, roads, power lines – could quickly paralyze the country’s resource economy. His book suggests that aboriginal resistance to new pipeline projects, however irksome, is less worrisome than the possibility of First Nations anger escalating to outright violent disruption of existing infrastructure.

By availing themselves of extreme measures, even radical factions within aboriginal communities know they risk inciting retaliation of disproportionate force from Canada. Their militancy could inadvertently set their development agenda back dramatically.

In this regard, University of Saskatchewan professor Ken Coates writes in #IdleNoMore: And the Remaking of Canada that “[First Nations] eschew the surprisingly easy tactic of closing down highways and rail traffic and almost never engage in acts of violence and civil disobedience.”  In his view, “The surprise is not that there are occasional protests and conflicts … It is remarkable that there are so few.” 

GREEN FRIENDS 

The location of their traditional territories in the vicinity of so many prospective resource projects gives First Nations tremendous legal and political leverage in advancing demands.

With land reserves totalling over 6.5 million hectares in aggregate – much of it home to valuable commercial timber, arable land and mineral deposits – Canada’s First Nations are learning to think and act like resource owners.

Notwithstanding the ongoing migration of aboriginals from reserves to urban areas, they feel deeply responsible for the environment of their patrimony. Many have no plans to leave, so it’s little wonder they are demanding assurances from industry of minimal disturbances to land, air and water. 

In this vein, First Nations have mad common cause with large environmental groups like Greenpeace and the Suzuki Foundation to hold undesirable development in check. This alliance has resulted in a real win-win relationship: First Nations gain access to professionally managed, deep-pocketed, internationally connected lobbying organizations, while environmentalist groups can parlay their financial and operational support of indigenous causes into reputational capital.

As former Canada West Foundation president Roger Gibbins has pointed out, “The catch is that the alignment of interests extends only so far.” Whereas environmentalist groups are anit-development, First nations actually do want and need development, albeit on their terms.

“At some point the marriage of convenience will break apart,” says Mount Royal University professor Frances Widdowson, author of Disrobing the Aboriginal Industry: The Deception Behind Indigenous Cultural Preservation. 

Environmental concerns play a central role in aboriginal opposition to the Northern Gateway project. When asked about Premier Notley’s decision to de-prioritize the government’s position on Northern Gateway because of deep aboriginal concerns over environmental risks, Widdowson draws a parallel to the City of Calgary’s negotiations with the Tsuu T’ina First Nation over reserve access for the new ring road.

In that case, she says, the city negotiators felt Tsuu T’ina’s demands were unrealistic and ended up walking from the table, possibly forfeiting the whole enterprise.

“When it suddenly looked like the project would be dropped, the reaction was ‘Whoa, wait a minute!’”

Tsuu T’ina returned to the table with a better offer, and eventually a deal was reached. With this comparison, Widdowson suggests that the withdrawal of the government’s endorsement of Northern Gateway might send a powerful message to aboriginal communities along the right-of-way: if you don’t show greater flexibility at the bargaining table, you might end up without an equity stake or other economic spinoffs at all. 

FOUR WAVES, FOUR CONDITIONS

If you listen to Calvin Helin, Author of Dances with Dependency: Out of Poverty through Self-Reliance and son of a hereditary chief of the Gitga’at tribe of the Tsimshian First Nation, the ring road analogy just isn’t applicable here.

Helin is chair of Eagle Spirit Energy Holdings, which, in partnership with the Vancouver – based Aquilini Group, seeks to build a pipeline to source partially upgraded oilsands bitumen from Alberta for export to Asian markets or possibly to new refining facilities at Grassy Point, near Prince Rupert. The project is in direct competition with Northern Gateway.

He shrugs off suggestions that B.C. First Nations are trying to extract better terms in exchange for their approval under the guise of environmental concerns. He also dismisses the view that they’re somehow anti-business.

“First Nations are not anti-development. They need development,” he says. “The unemployment in communities is over 90 percent in some places. But development has to be done responsibly, with the greatest respect for the culture and traditions.”

To this end he points out the media “under-reported” that the Lax Kw’alaams community awarded the Eagle Spirit project permission to move to the next step in the approval process, which is the signing of an exclusivity and benefits agreement. “This occurred just days after the community’s rejection of the Petronas offer,” he says.

Helin says that the past 10, 000 years of First Nations history is made up of four periods or waves. The First Wave ended and the Second Wave began 400 years ago with the arrival of Europeans in North America. Like during the first “pre-contact” period, aboriginals during the second “colonial” period were still fiercely self-reliant; they managed to quickly adapt to new economic realities created by the fur trade and other industries introduced by the French and British.

The real trouble began with the Third Wave, when Britain’s Poor Law and the Canadian Parliament’s Indian Act started shaping aboriginal policy. The fundamental aim of these policy documents was to deal with populations “that operated outside the accepted social structure … [and] might become a source of disorder. 

Helin spends much time explaining history because many Canadian aboriginals now see themselves at the dawn of the Fourth Wave. This new period is marked by a transition way from the paternalistic structures of the Indian Act toward greater economic self-=reliance and political self – determination. And not surprisingly, the new economic self-reliance will come from extracting and transporting oil and gas and other resources from and across First Nations lands.

The Eagle Spirit team spent more than two years listening to First Nations and then summarized the feedback into four baseline conditions that any ex-Alberta oil pipeline must fulfill to earn social licence. 

Firstly, it must satisfy world-class environmental standards that have been worked out in collaboration with First Nations. Secondly, it cannot serve the export of raw bitumen. Thirdly, it cannot connect to a marine terminal at Kitimat. And fourthly, the negotiated economic benefits for participating First Nations must be commensurate not only with the real value of transiting their territories, but also with the environmental risks.

NOTLEY NODDING

Speaking historically, Helin’s four conditions are a critique of Enbridge, especially of Northern Gateway’s original community outreach program, which belonged more to the oil paternalistic Third Wave than to the new collaborative Fourth Wave. Not surprisingly, other project proponents with competing pipeline proposals like Pacific Future Energy and Kitimat Clean follow Eagle Spirit’s lead in broadly advertising their aboriginal bona fides as a major competitive advantage. (And Kitimat Clean does not, of course, agree with Helin’s third condition.)

Stockwell Day, current chair of Paciic Future Energy’s advisory board, shows he gets the point about the Fourth Wave in a recent Calgary Herald op-ed, declaring, “We need to recognize B.C. First Nations as landowners and governments. We must recognize the true value of First Nations lands, their traditions and their people. We must work with First Nations every step of the way – from concept to implementation – to build any resource projects on their territory.”

This brings us back to Premier Notley and her dismissive view of Northern Gateway – and presumably to any green-field oilsands pipeline to tidewater. 

Her first objection stemmed from her belief that aboriginal opposition was more or less unshakeable. Yet the success of getting aboriginal support claimed by thelike fo Calvin Helin, Stockwell day and even Kitimat Clean’s David Black for their projects shows that everything is in flux. Negotiations continue apace. Even Northern Gateway may turn its consultation experience into greater acceptance. If Premier Notley doesn’t reconsider her inflexible stand, she may be willfully ignoring the actual development needs of First Nations.

Her second objection about the environmental risks was really about British Columbians not wanting to permit the export of raw bitumen. But right in the middle of the Alberta election campaign, she stood before Edmonton’s east end upgraders and declared, “I believe there is a better way to build Albert’s economy, to put refineries like these at the heart of our future growth and prosperity.”

These bold words may have horrified many sober-minded energy economists, but they were music to the ears for these pipeline developers, all of whom include or are exploring the possibility of including bitumen processing in their plans – albeit for plants sited in B.C., not Alberta. Might not these plans – or even a New Democratic Party – inspired, synthetic-crude-piping Northern Gateway – force the premier to alter this second objection? 

There appear to be proposals on the table, acceptable to First Nations that could get Albert’s bitumen (in value-added form) to Asian markets. More importantly, these proposals wouldn’t require subsidies form Albert’s taxpayers and would space the premier of criticism from former finance minister Ted Morton that public funds are financing another “boondoggle.”

One thing is clear: Canada needs to increase oil and gas export capacity to Asia. For Canada, this is about nation building. What many fail to realize, however, is that First Nations, especially in B.C., see these infrastructure projects as integral aspects of their own nation building. For that reason, only those projects that don’t build one nations at the expense of the other will most likely ever see shovels in the ground.