Energy firms risk losing their operating permits, cancellation of projects and paying millions of dollars in compensation unless provincial governments consult properly with aboriginal groups, lawyers and First Nations leaders warn.

Recent decisions by the B.C. Court of Appeal – which an impending Supreme Court of Canada ruling could uphold, overturn or modify – have put equal responsibility on resource-development companies as on provincial governments to consult with and accommodate aboriginal peoples’ interests before any resources are developed, they say.

In fact, the B.C. Court of Appeal decisions hold energy and other resource companies responsible even if it is the provincial government that hasn’t adequately consulted with aboriginal groups, says lawyer Tony Fogarassy at Clark, Wilson in Vancouver.

The situation is especially precarious for companies operating in B.C. (which unlike Alberta isn’t covered by treaties with First Nations) “if you don’t do your homework and if you don’t have a strategy in place,” he said.

Photo courtesy of EnCana Corp.
Fort Nelson First Nation Chief Liz Logan is concerned that aboriginal voices are being drowned out by development fever.

“This is something that can’t be done after the fact,” Fogarassy said. “You can’t go in and consult after you’ve created an open-pit mine, for example. That eviscerates the whole notion of what an aboriginal right is all about.”

Although the B.C. government is still in the process of negotiating treaties with dozens of aboriginal groups, First Nations leaders say that Premier Gordon Campbell’s Liberals are pushing ahead with oil and gas development without doing meaningful consultation or addressing aboriginal concerns.

“There are a lot of what we feel are important concerns that we raise and they basically don’t even respond,” says Chief Liz Logan, chair of the Treaty 8 First Nations. Treaty 8 encompasses northern Alberta and northeast B.C., where most of B.C.’s oil and gas development is occurring.

B.C. Energy and Mines Minister Richard Neufeld was not available for comment on this story.

However, the B.C. government has taken steps in the past to improve consultation with aboriginal people.

In November 2002, the government revised its 1998 consultation guidelines and set out a five-step policy on consultation and resource development. The policy includes identifying opportunities to accommodate aboriginal interests, “bearing in mind the potential for setting precedents” that may impact government departments and other agencies.

In 2001 and 2002, the B.C. government also signed five agreements and two memoranda of understanding with Treaty 8 First Nations in northeast B.C., outlining the consultation and development protocols to be followed by the government and aboriginal groups.

But Treaty 8 First Nations from B.C. and Alberta, which met last month in Fort St. John to discuss for the first time the impacts of oil and gas development in their traditional territory, say those protocols aren’t being followed. In a statement, aboriginal leaders said: “We find that oil and gas development as currently practised has an unacceptable adverse impact on wildlife, and on the exercise of traditional hunting and fishing rights (because of) environmental degradation, as well as infringing on our basic human rights to clean air and clean water, and we are committed to rectifying this.”

Logan stressed that Treaty 8 First Nations aren’t opposed to oil and gas projects or other resource development.

However, the B.C. government has failed to address concerns such as the overall long-term impacts of development, compensation, resource revenue sharing, co-management of the land base and protecting the integrity of Treaty 8, she said.

“All we’re asking for is sustainable development,” Logan added.

“Slow down. Let’s have a look at the bigger picture.”

Fogarassy and other lawyers say that until the Supreme Court clarifies the current law, provinces and energy companies that push ahead with development without consulting with and accommodating aboriginal interests – especially in areas without treaties – do so at their peril.

The B.C. Court of Appeal, in two related decisions involving the Haida Nation versus the B.C. Crown and forest firm Weyerhaeuser Company Ltd., “has placed these duties squarely onto the shoulders of the resource industry including the energy sector,” Fogarassy said in a paper co-authored with KayLynn Litton, a lawyer at Macleod Dixon in Calgary.

They warn that if the government fails to properly consult with and accommodate aboriginal interests, “resource tenures such as permits, licences or leases may be invalid and activity conducted pursuant to the tenures may result in damages awarded against industry in favor of affected aboriginal peoples.”

The B.C. Court of Appeal decisions that set this precedent are under appeal to the Supreme Court, which is expected to issue its ruling any day now.

But it’s unlikely that the Supreme Court will decide that energy companies and other resource firms have no responsibility whatsoever to consult with aboriginal people, Fogarassy said in an interview.

It’s more likely that the country’s highest court will provide a “road map” that clarifies what these duties are for the private sector and what provincial governments are responsible for, he said.

Legal experts caution, however, that even if the Supreme Court shifts the burden of responsibility back to the government, companies could still find themselves doing most of the consultation and accommodation of aboriginal interests.

Governments in many cases aren’t well-equipped to carry out this work, says Charles Willms, a lawyer with Fasken Martineau in Vancouver.

So if a company doesn’t want its proposed project stalled or permanently derailed, “it may fall upon the proponent to ensure the adequate consultation takes place . . .,” Willms says in a paper co-authored with law student Alison Kearns.

In Alberta where there are treaties with First Nations, the provincial government and industry don’t face the high legal risk that exists in B.C., in proceeding with energy and other resource development on Crown land that has been traditionally used by aboriginal people.

Nevertheless, companies wanting to proceed with projects in Alberta still need to build a relationship with the aboriginal people who live there, Fogarassy noted.

“Without that relationship building, you could well be stuck at the altar trying to get a deal going forward.”

Alberta’s Aboriginal Affairs and Northern Development Department has spent about $10 million so far on a one-year effort to draw up a new policy and guidelines on consultation with First Nations in the province.

“We want to have something in place so that when projects come about, there are these guidelines that both sides can follow to make sure that everybody understands each other’s position,” says Jay O’Neill, a spokesperson for the department.

The department has met with First Nations and industry, and is about to start drafting the documents, he said, adding they will be ready “sometime in the new year.”

David Pryce, vice-president of Western Canada operations at the Canadian Association of Petroleum Producers (CAPP), says the industry group has been lobbying the Alberta government to get the policy and guidelines in place as soon as possible. “We’ve been saying it’s really important to get that certainty for access when we’re dealing with First Nations.”

The oil and gas industry accepts that, on a project-by-project basis, companies have an obligation to consult with aboriginal communities and include them in the economic benefits of development wherever possible, Pryce said.

The court decisions from B.C., as well as confrontations over access to Crown land in northern Alberta that occurred during last winter’s drilling season between some First Nations and oilfield contractors, have spurred the need to clarify the responsibilities of both government and industry, he said.

Alberta’s new policy also needs to ensure that government has the capacity to carry out the consultation for which it is responsible, Pryce said.

In B.C., aboriginal leaders say that the government needs to take more seriously its responsibility for consultation, in light of problems with expanding oil and gas development being reported by aboriginal communities.

Chief Logan noted that a new study by an independent biologist and funded by the West Moberly and Saulteau First Nations, both located southwest of Fort St. John, found that moose and other wildlife are getting abscesses and deformed organs from licking the minerals at oilfield flare pits.

Band councillor Sally Havard, from the Iskut First Nation in northwest B.C., said the findings, along with other verbal accounts presented at last month’s Treaty 8 meeting in Fort St. John, were an eye-opener.

“If our whole community knew what has happened to the fish and wildlife as a result of oil and gas development, we would stop Shell Canada from developing coalbed methane at the headwaters of the Stikine, Skeena and Nass Rivers,” Havard said.

Logan said that Treaty 8 chiefs have given the B.C. government until the end of the year to address their concerns or face unspecified actions from First Nations.

(Mark Lowey can be reached at mark@businessedge.ca)