Minding the business of First Nations

When it comes to dealing with First Nations issues in Canada, increasingly, industry and native groups are getting out in front of government in an attempt to build relationships and business. They are working on progressive agreements to advance opportunities economically both for the First Nations communities and the companies to expedite projects, particularly in the resource sector.
The missing link in this push forward, according to many aboriginal law experts, is government’s inability to make decisions and keep Canadian resource projects of interest to investors. “That is the elephant in the room — the government part of the issue and I think many of my First Nation friends would agree. What exactly is the game plan?” says Thomas Isaac, a partner with McCarthy Tétrault LLP who heads up the firm’s aboriginal law group based in Vancouver.

Isaac says neither provincial nor federal governments have been able to keep pace and develop sustainable treaties or interim measures to allow business and First Nations to feel they are being brought into the governance model. The ability to participate in the mainstream economy is what many First Nation groups are looking for, he says. It’s a concern held by many who represent both First Nations groups and business entities. “As one chief told me, ‘We can’t eat rights and title,’” says David Bursey, a partner with Bull Housser & Tupper LLP in Vancouver. “A lot of First Nations are looking to build something for their community.”

When it comes to big business and aboriginal groups working together, there has been significant change in the last five to 10 years, says Bursey. “We counsel First Nations and companies not to wait for government; try to develop relationships directly and there can be great success in that. Most companies are already there — they would rather work out the relationships. Business wants certainty. They want to know what roles and relationships will govern the transactions and projects they are seeking to develop. There are lots of disputes over rights and title, but we’re trying to focus on sustainable economic enterprise.”

Bull Housser has also worked on rights and title cases and represented various parties in some major cases right to the Supreme Court of Canada, but where Bursey sees the big drive these days is really on the business side.

Rio Tinto Alcan is one example of a company that a decade ago was looking to develop better relations with the First Nations groups they deal with. In 2000, Rio Tinto Alcan decided it wanted a different kind of legal counsel to assist it with First Nations projects so the mining giant interviewed a number of law firms. “From the outset of our work with Rio Tinto Alcan, it was that they were more interested in building good relations with neighbouring First Nations communities than litigating. That interest fit well with our approach,” says Bursey. “They told us we were the only ones they interviewed who brought business lawyers to the meeting. We told them, ‘You can fight, but we would rather build things with you, and you need to start working on your relationships with the First Nations. It will take some time but it will pay dividends in the long run.’”

A decade later, Bursey says the approach seems to have worked. Rio Tinto Alcan’s landmark agreement in principle with the Haisla Nation in support of its primary metal operations in British Columbia was officially ratified by the Haisla Nation membership in March 2010. The Haisla Nation-Rio Tinto Alcan Legacy Agreement establishes a formal framework for the two organizations to work together for the next 30 years to maximize the opportunities and benefits of aluminum operations in Kitimat, B.C. It is, in essence, a private treaty between the company and the Haisla.

Rio Tinto Alcan is going through a major modernization of its smelter to reduce emissions and create efficiency. The agreement helps establish a base from which both sides can benefit. It also represents a $3-billion investment in the B.C. economy. The deal also helps resolve some of the long-standing disputes from the past, says Bursey, who admits encouraging big business and First Nations to work together towards agreements that serve both groups economically and socially is not a revolutionary idea, but emphasizes it requires a certain mindset.

The Haisla have also formed a tripartite partnership in the Kitimat Liquid Natural Gas plant on land the Haisla held, which recently obtained a permit to export held by Encana Corp., Apache Corp., and EOG Resources Inc. “That could be a $5-billion to $7-billion project that we will hear about later this spring as to whether it will go forward,” says Greg D’Avignon, president and chief executive officer of the Business Council of British Columbia. “It was a key opportunity to do something that is vital to British Columbia and Canada’s future, which is to enable the export of natural gas which is about $3.50 in Canada, but by exporting it to Asia the price goes up to $10 to $12. The Haisla have done a phenomenal job, as one example, but it isn’t happening in every corner of the province.”

The negotiate-versus-fight approach has also worked in areas where business is extremely competitive such as the Prince Rupert Port Authority, which competes for business with other ports along the West Coast. The port’s inside legal counsel says over the years it’s proven to be more fruitful to take a business law approach. “We’ve moved away from a litigation footing and more into a commercial type of discussion,” says Andrew Mayer, vice president for commercial and regulatory affairs with the Prince Rupert Port Authority. “We don’t look to retain litigators to negotiate deals with First Nations, we look to retain business lawyers with an aboriginal law background who have a track record for negotiating accommodation agreements with First Nations.”

The port reached a comprehensive settlement agreement in March 2011 with the Tsimshian First Nation in Prince Rupert with respect to the port’s existing Fairview Container Terminal for a project that will quadruple the size of the terminal to 2 million 20-foot equivalent units (containers). The comprehensive settlement agreement provides the First Nations people with contracting opportunities for construction of the facility and a commitment to provide employment during the construction and operations phases and provides an ability to get some benefits in the form of ongoing payments throughout the life of the project. “The solution has been to work with aboriginal rights and title in mind, but to strike arrangements with local First Nations to give them opportunity to participate in all phases of the project,” says Mayer.

The deal also includes a framework for dealing with other types of consultation along the way and that gives aboriginal groups certainty over what their entitlements are for the next 40 years. “It also gives us certainty knowing we settled those issues around container-related development for the next 40 years,” says Mayer.

It’s all about convincing First Nation groups and corporations that going in with a strictly winner-takes-all approach doesn’t work, says Bursey. “We always say we’d rather build things than fight. We can fight if necessary, but [what] will really help is getting some sustainable economic enterprise within the communities to help resolve a lot of the issues.”

These kinds of business deals have been embraced by corporations and native groups alike as B.C.’s treaty process drags on. A report issued recently by Sophie Pierre, chief commissioner of the B.C. Treaty Commission, referenced the frustration with how sluggish the treaty process has been, says Bursey. “It’s been almost 20 years with very little to show for it.” Isaac says government is frozen by not wanting to make tough decisions. “You generate risks by not making decisions,” he says. “In my view that’s probably the single biggest public policy issue in this area. Sustainability — are our governments putting in processes that are in fact sustainable over time?”

What frustrates Isaac is that the Supreme Court of Canada has, in his view, been consistent in its approach to First Nations issues. “The one single theme flowing out of every decision on [Charter of Rights] s. 35 and the duty to consult — some 30-odd decisions — the consistent theme is the willingness of the court to defer to the Crown. It is the Crown’s obligation, not the court’s, to do the balancing act between aboriginal and competing societal interests. This is the fundamental message flowing out of the case law.”

D’Avignon of the Business Council of B.C. calls the treaty process “stagnant” and a “millstone” around the neck of the economy in terms of not providing certainty for capital to be invested in the marketplace. For government, it creates uncertainty with respect to the relationship it has with First Nations in the future. The Business Council of B.C is actively engaged with government and First Nations, particularly around the energy and resource sector. In 2005, it identified the 10 key trends that would shape the B.C. economy through 2010. Expanding the role of First Nations in economic and business development was identified as the No. 1 trend affecting business. “It’s a very heterogeneous issue depending on the First Nation, the region of the province, the government. It’s not just government but federal and provincial governments. Then you discern that into three areas: permitting around ongoing operations, the second would be projects and significant investments to create opportunity and wealth, and the third is with respect to treaty work that gets done,” says D’Avignon.

Companies have the choice to make an investment in central Asia or central British Columbia, says D’Avignon, and at the end of the day it’s about the certainty of the opportunity and the return on investment. He adds that while it has a good plan in place, the province of B.C. and the federal government tend “to be timid” in their approach to consultation and accommodation issues and vague in creating clear expectations for what agreements can and should look like.

In his experience, Mayer says there have been challenges but he doesn’t blame the federal or provincial government. Some of the challenges relate to determining the nature and scope of First Nations’ aboriginal rights. “Those issues need to be considered prior to development and when there have been delays or difficulties it often arises out of a need for clearer direction from the federal government,” he says.

Lawyers say First Nations issues are where environmental law was at in the late 1980s. Companies have realized they can be viewed as progressive or good corporate citizens if they develop good relationships with First Nations groups. Building trust is perhaps the biggest hurdle. On the corporate side, there has to be a willingness to try to be transparent and open. Some may see that as a loss of control because it involves accommodation that has a cost attached to it. On the flipside, native groups often fear giving up something in trying to establish rights and title with the Crown in a more permanent way. “You can satisfy both of those concerns by putting the rights and title fight to the side, because a private company cannot confirm or deny rights and title — that’s for the Crown to work out, but you can work into a business relationship a collaborative economic venture that doesn’t affect rights and title,” says Bursey.

But companies can’t go with the approach that they can fly into a community in their helicopters and expect they can work business magic with First Nations. There has to be a high degree of trust and that means big business has to be clear about what its interests are from the outset.

D’Avignon says both provincial and federal governments need to have very clear, definitive timelines around how long is adequate consultation. “Some First Nations are being inundated with licence renewals and permit renewals and review as well as project reviews and they don’t have the capacity.” On the other side, he says, industry doesn’t have the capacity either. He predicts the tipping point is coming where projects will slow and/or operations be interrupted because the cost of doing business will exceed the company’s ability to manage it either from a personnel standpoint or pure cost standpoint.

Governments desperately need a plan, says Isaac, especially at the provincial level, given some of the ideas they are considering. For example, B.C. is looking at offering revenue sharing — upwards of 37.5 per cent of mining tax on new projects provided to First Nations. “I’m not opposed to it — my question is ‘has anyone done an economic analysis of how do we replenish the monies as mines close in British Columbia?’”

Isaac says he coaches his clients to look at First Nations issues as just another area of risk management in their business. “You have to look at aboriginal issues as you would any other legal or practical risk issue,” says Isaac. “It can take the emotion out of the issue and from my observation that has been extremely helpful for my clients."

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