Aboriginal Peoples and Natural Resource Extraction in Canada: A New Paradigm?

ABORIGINAL PEOPLES AND NATURAL RESOURCE EXTRACTION IN CANADA: A NEW PARADIGM? Martin Papillon is Associate Professor of Political Science at the Université de Montréal. He has published extensively on the politics of Aboriginal-settlers relations in Canada. His current work focuses on Aboriginal consultation and participation in the governance of natural resources. He is the editor of the upcoming volume State of the Federation: Aboriginal Multilevel Governance in Canada.

Martin Papillon

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n September 2014, the Atikamekw nation of central Quebec declared its sovereignty over its traditional territory, the Nitaskinan. They claimed, industries and governments will need to obtain their consent before engaging in economic activities on their lands. More recently, the Lax Kw’alaams First Nations rejected by referendum a $1.15-billion (Canadian dollars) deal with the multinational Petronas for the construction of a liquefied natural gas export terminal on the Pacific Northwest coast of British Columbia. These events are the most recent expression of a profound change in relations between Aboriginal peoples, the Canadian state and extractive industries. I discuss some of these changes here, and their potential implications for the Canadian economy. A New Legal Landscape In Canada, as elsewhere around the world, Aboriginal populations have long been considered causalities of

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development. The rivers and forests that are the sources of their livelihood were destroyed, communities were displaced, their lifestyle and traditions forever altered, all in the name of economic prosperity and the inevitable march of modernity. Hydroelectric dams, forestry and mining, not to mention oil and gas production, were deemed of higher priority than the people living on the lands irremediably transformed by these economic activities. This process of marginalisation no longer seems inevitable today. Aboriginal peoples are instead becoming actors of economic development on their traditional lands. This seismic shift is rooted in legal advances both in Canada and in the international arena. In Canada, the Supreme Court has developed a significant jurisprudence that establishes a constitutional duty to consult, and when necessary, accommodate Aboriginal peoples when government decisions may adversely impact their rights. The exact nature and intensity of this duty, the Court stated in the Haida

Nation case of 2004, may vary according to the circumstances and the potential adverse impact of the economic activities considered, but it does not constitute an Aboriginal veto on development. In a more recent and highly significant decision, the Supreme Court recognised for the first time the Aboriginal title of a First Nation, the Tsilhqot’in of British Columbia, over a 1,750-square–kilometre territory. The Aboriginal title, the court specified, is a form of fee simple propriety right held collectively by the concerned group. Most significantly, the Aboriginal group that holds such a title must not only be consulted but also consent to economic activities on its traditional territory. Governments can bypass Aboriginal consent, the Court added, only if such an infringement serves a “compelling and substantial public purpose.” The Supreme Court of Canada has therefore opened the door, although with many restrictions and only in some very specific cases, to the principle of free, prior and informed Aboriginal consent to

economic activities on their traditional lands. This principle is at heart of the United Nations Declaration on the Rights of Indigenous Peoples and is increasingly recognized as a new international standard for relations between Aboriginal peoples and extractive industries. While some ambiguity remains as to their exact nature, Aboriginal peoples therefore have specific rights that can no longer be ignored. Translating these principles into concrete governance practices nonetheless remains a challenge. Federal and provincial authorities in Canada have put in place a number of procedures to fulfill their legal duty to consult Aboriginal communities. However, Aboriginal groups challenge these measures as insufficient and too vague. Drawing on the United Nation’s Declaration on the Right of Indigenous Peoples, they want a more substantial say in the decision making process than mere consultation. Governments; on the other hand, hesitate to grant Aboriginal communities too much decisional power, fearing that this will lead to a systematic blockage of mining, forestry or, as in the recent case of the Lax Kw’alaams First Nations, oil and gas pipelines. The resulting legal and political uncertainty has serious economic repercussions. Major projects, such as the Northern Gateway pipeline that is expected to connect the Alberta tar sands to Asian markets, are put on hold. Other projects, such as the Ring of Fire mining development in northern Ontario falters, largely because of the financial costs associated with the ongoing legal uncertainty regarding Aboriginal rights. A different approach is

clearly needed in order to translate this new Aboriginal rights paradigm into concrete relationships on the ground. Partners in Development In fact, the solution is simpler than it seems. Governments and developers alike must accept the full implications of the principle of free, prior and informed consent. Not only would this guarantee a stronger legitimacy and a better legal and political base for economic development projects, but it will also facilitate the development of stronger relationships with local Aboriginal populations affected by these projects. An approach that recognises Aboriginal peoples’ right to fully participate in the decision making process would shift the logic of Aboriginal-settlers relations on its head, from one of imposition to a true partnership between consenting parties. A partnership approach would lead to new forms of deliberation on project proposals, on their consequences and possible benefits with communities. This is precisely what the Supreme Court is inviting us to do in its case law on the duty of consult. Aboriginal rights, the Court has long argued, should be understood as frameworks to reconcile the ongoing presence of the first inhabitants of the land with the economic interests of Canadian society. The empirical research on these questions remains rudimentary, but it seems clear that a mining project developed with Aboriginal peoples, following the simple principle that they must support the project in order to make it happen, has more

chance of succeeding on financial markets than one that is mired in protracted legal and political battles. In fact, this logic is already taking hold on the ground. The negotiation of Impact Benefit Agreements (IBAs) with Aboriginal communities has today become a privileged tool for mining companies seeking greater certainty for what are cost intensive projects. IBAs are private contractual agreements between project proponents and communities. In exchange for their support for a project, Aboriginal peoples are generally offered financial compensations, a say in the design of the project to limit its adverse impacts and, in some cases, shares in the resulting benefits of the project, notably through guaranteed jobs or royalties. IBAs are essentially a form of negotiated consent between Aboriginal peoples and developers, usually in parallel with formal environmental assessment and government consultation processes. These agreements, however, are not without controversy. For some, IBAs are a more or less subtle way to buyout communities and to circumvent (or privatize) the formal approval process associated with the duty to consult. Given their confidential nature, it is also very difficult to know what was negotiated and on what basis. This lack of transparency increases the risk of conflicts of interests. Once an IBA is signed, Aboriginal representatives signing these agreements can face unduly pressures as they have a direct interest in seeing the project succeed. It then becomes more difficult for the citizens of these

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communities to question the legitimacy of the project, let alone to reject it. IBAs are certainly part of the solution, but they need a proper regulatory framework in order to ensure government oversight and some level of protection for communities involved in these high stakes negotiations. Project proponents are not alone in seeking partnerships with Aboriginal peoples. Some provincial governments now accept, as a matter of policy, the sharing of royalties derived from resource extraction on Aboriginal lands. British Columbia is a leader in this respect, but Quebec and Ontario have also made headways in developing revenue sharing schemes with Aboriginal communities. This kind of revenue sharing is no panacea for Aboriginal communities. The amounts received are often minimal. They can also vary considerably from one year to another as they are at the mercy of international markets. However, through such agreements, provincial governments acknowledge the legitimacy of Aboriginal peoples as partners in the governance of their ancestral lands. Several Aboriginal communties also wish to go further and become actors in the economic development of their territories. Some communities even become shareholders of projects through joint ventures with public or private partners. For example, the Moose Cree community of Northern Ontario partnered with Ontario Power Generation in the

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construction of a hydroelectric project on the Mattagami River. The community was therefore able to define and frame the project to limit its adverse impact, participate in its realisation and ultimately benefit from it. The Need for Clear Rules on Consent IBAs, revenue sharing schemes and joint ventures are all examples of mechanisms that have emerged to translate Aboriginal rights into practical arrangements. The viability of these partnerships rests, however, on an essential principle: Aboriginal peoples must have the right to say no. And sometimes, they do so. The Kw’alaams First Nations, for example, have rejected the proposed partnership with Petronas for the construction of a liquefied gas terminal on their traditional lands in British Columbia. The provincial government and the powerful economic interests behind the project must now accept this verdict and adapt their proposal to satisfy the Kw’alaams peoples. Forcing the project through in spite of a lack of Aboriginal consent is almost guaranteed to end up costing just as much, if not more in time and resources, not to mention the negative impact it will inevitably have on the legitimacy of the project for the broader population. A true collaborative model with Aboriginal peoples rests on the principle of free, prior and informed consent. The recognition of this principle and its translation into

formal rules and processes would not only contribute to restoring Canada’s international reputation concerning the rights of its Aboriginal populations, it would also allow Aboriginal peoples to become true economic actors in building an economic model that is fair and stable in the long-term. For Canada’s future, it is time to embrace Aboriginal rights as a driver rather than as an obstacle to prosperity.