JP Gladue, CEO of Canadian Council for Aboriginal Business
“It’s a positive thing – whether you look at equity ownership or gifting, it’s a good thing…We’re getting involved in the economy.” – National Chief Perry Bellegarde, Bloomberg.
The Canadian government may be giving all or part of the Trans Mountain pipeline to First Nations, according to a Thursday news report. National aboriginal business leader JP Gladu thinks equity participation in natural resource projects, including energy infrastructure, should be part of “economic reconciliation” with indigenous communities.
The Trudeau cabinet is apparently considering placing all or part of the project – it’s not clear if all Kinder Morgan Canada assets would be included or just the 590,000 b/d Trans Mountain Expansion from Edmonton, Alberta area to Burnaby, BC – in a trust to fund First Nation projects.
Gladu is CEO of the Canadian Council for Aboriginal Business, which encourages corporations to partner with indigenous communities in ways that strengthen sustainable local economies. He believes many First Nations have developed the management and financial capacity to be partners in major projects like pipelines, and that Canada’s strategy for reconciling with indigenous peoples should include equity participation in the resource development taking place in their backyards.
“I think that in the past there has just been a reluctance on industry’s part and government’s part to open up this conversation out of fear that they’re going to have to give up too much or that it’s going to overcomplicate things,” he said in an interview with Energi News.
“Nowadays, becuase of the evolving legal landscape with indigenous communities, they’re doing it out of necessity but what they’re finding is that, ‘Hey, those First Nations weren’t lying. They are great partners.'”
The Federal Court of Appeal quashed government approval of the pipeline project in late August, partly because of consultation with indigenous communities – required by Sect. 35 of the Canadian Constitution Act of 1982 – did not meet standards set out by the Supreme Court in earlier decisions. Ottawa has promised to redo consultations in a way that does pass muster.
Gladu argues that satisfying the courts’ requirements around consultation would be easier if First Nations sat at the board table and were partners in the truest sense of the world.
“Consultation is important, but my bias is getting from consultation to partnerships to joint ventures in short order becuase of the opportunity costs – there’s money fleeing this country becuase we can’t seem to get there quick enough,” he said.
Very few First Nations have the capacity to review resource project applications or environmental impact assessments, says Gladue, and governments for their part don’t appear to have the capacity to consult in a way – “meaningful dialogue,” the ability to address indigenous concerns during consultations, be more than just “note takers” – demanded by the courts. Investment and equity participation can be the bridge to true consultation.
“Business is the equalizer,” he said. “When you have business agreements – either equity, procurement, or benefit agreements, – a lot of the other consultation stuff starts to fall in place.”
Gladu says he had a chance to discuss pipelines with Ian Anderson, CEO of Kinder Morgan Canada, before the company sold most of its assets – including the existing 300,000 b/d Trans Mountain pipeline, as well as the expansion project – to the Canadian government earlier this year. While he praises Anderson for a respectful, consultative approach to First Nations, he’s not sure the publicly traded company had the flexibility to allow indigenous communities to purchase equity, but that all changes now that Canada is the new owner.
“The time is right now to sell it for whatever equity position communities can get together and throw into that pipeline. Government has got to say, let’s start a partnership with First Nations if we are really into the idea of ‘economic reconciliation,'” he said.
“Let’s do it. Industry and most First Nations will get behind that.”
Equity “is definitely becoming more of a conversation than it’s ever been in this country from my circles, and from my travels it’s clear that equity positions are just as important as royalty sharing,” he said.
“Let’s empower the communities. How cool would it be for the federal government to say, ‘You know what First Nations, you guys now own the project, and now you guys consult with each other, and now you guys consult with your communities. We are empowering you to actually take the lead now.’ What a 180 degree turnabout that would be,” he said.
Gladu agrees that Canada is having the wrong coversation around First Nations and energy infrastructure projects. There is a different way to satisfy the constitutional “duty to consult” that seems to bedevil the federal government (the Federal Court of Appeal also overturned approval of the Northern Gateway pipeline in 2016 because of inadequate consultations), he believes, and Canada has an historic opportunity to help First Nations become business owners and decision makers.
“I think anybody that is around the sector understands the value of equity ownership. It creates certainty. Who cares if you own the pipeline? Oil producers can get their product to market because the economic benefits are incredible for everybody,” he said.
“Then the First Nations, if they’re funded properly, can manage and mitigate environmental risk in concert with government.”
Not all indigenous communities will want to own pipelines or be happy that other First Nations are owners, says Gladu, but there are over 600 First Nations in Canada and they don’t agree on plenty of issues. Indigenous people are also just as divided as other Canadians on issues around climate, developing oil and gas extraction, and how to protect the environment.
But the conversation over equity ownership is heating up and the Trudeau Government is now in a unique position to advance the discussion.
If not now, then when?