Doug White: The Malahat LNG Story


 Doug white

Doug white

The Malahat First Nation and its partner Steelhead LNG announced on August 20th, 2015, a proposal to build a floating liquefied natural gas plant in Saanich Inlet at Bamberton along with an underwater supply pipeline across the Salish Sea that would cross both American and Canadian waters. Steelhead LNG has also been working toward another major LNG project with the Huu-ay-aht First Nation on the west coast of Vancouver Island at Sarita Bay on the waters of Barclay Sound and toward the entrance to Alberni Inlet. Just weeks after the Malahat LNG announcement, on October 3, 2015, the National Energy Board approved a 25-year licence for the annual export of up to six million tonnes of LNG from the Malahat LNG project.

Based on reported negative reactions from within the Malahat First Nation itself and from neighbouring First Nations, it became immediately clear that the Malahat First Nation had not engaged with or secured consent from them. Further, the NEB export licences were apparently issued without any notice or engagement with First Nations around Saanich Inlet. The proposal raises serious questions about the Pre-Confederation Treaty rights of the respective First Nations and the duty to secure consent for proposals that would interfere with those rights.

For over a century First Nations have watched with little say over land use decisions and the location of major projects that have had major impacts on their territories, rights and way of life. However, at the outset of the relationship between settlers and Indigenous Peoples on Vancouver Island, a very different relationship was created through the 14 Pre-Confederation Treaties commonly referred to as Douglas Treaties. These Treaties, and the legal principles and understandings that arose out of them starting in the early 1960s, granted recognition and respect of the Aboriginal Title interest to village sites and protection for the Indigenous way of life including hunting and fishing. Regarding the Treaties impact on provincial Crown jurisdiction, from White and Bob (SCC 1965) through Morris and Olsen (2006), it has been made clear to the provincial Crown that their jurisdiction and authority is limited and ousted by the need to protect the continuity of the rights set out in the Treaties. The federal government, for its part, must respect and uphold the treaty rights, is constrained by a fiduciary duty to safeguard the treaty protected rights, as well as a duty to diligently pursue the fulfillment of its constitutional obligations. Similar rights exist on the American side of the Salish Sea through the Stevens Treaties which led to the famous Boldt decision from the 1970s where the federal government sued the state government of Washington to uphold and protect the treaty rights to fish of their Indigenous treaty partners.

One of the most remarkable decisions in the history of Canadian courts powerfully reflects the principle that the provincial Crown cannot interfere with treaty rights. In Saanichton Marina Ltd. v. Claxton, (BCCA 1989) the highest court in British Columbia applied the principles established in White and Bob to confirm a trial level decision and thereby protect a Tsawout fishery recognized by the North Saanich Treaty of 1852 from a provincially authorized marina project. The provincial government had issued a licence of occupation – a form of property right – to the Saanichton Marina Ltd. company to build a breakwater and marina in Saanichton Bay. This would have interfered with the Tsawout people’s fisheries rights, so they sued to block the project.

The court wrote: “The words of the treaty upon which the present appeal turns are the following: ‘we are at liberty ... to carry on our fisheries as formerly.’” And that “it is clear that the word ‘fishery’ may be used to denote not only the right to catch fish but also the place where the right can be exercised.” The province’s legal theory was that they could make decisions that over time would ultimately extinguish the treaty rights:

"… the Crown contends that as settlement and development occurred in and around Saanichton Bay, the right of the Indians to carry on the fishery was gradually restricted and might ultimately, in certain parts of the bay, be extinguished."

The justices rejected this argument and stated that the Tsawout right to fish is unqualified:

"However, unlike the provisions of the treaties considered in these decisions, upon which the Crown relies, the right to fish, unlike the right to hunt, is not qualified or limited to unoccupied lands or qualified in any other respect. In my opinion, the treaty right with respect to the fishery should not be held to be so restricted."

Their conclusion was a resounding statement of the power of the Treaty rights to prevail over Crown authorizations that would permit projects inconsistent with the continuity of the rights:

"In my opinion, construction of the marina will derogate from the right of the Indians to carry on their fisheries as formerly in the area of Saanichton Bay which is protected by the treaty. To begin with it will limit and impede their right of access to an important area of the bay. Further they will not be able to carry on the stationary crab fishery as formerly, indeed with the loss of the eel grass, that part of the fishery will be destroyed in the area to be dredged. Construction will also disrupt other parts of the fishery in that area as well.

The development that has already occurred around the bay has not had such a serious effect on the fishery. This development, while of only a small area of the bay, will have a harmful impact on the right of fishery granted to the Indians by the treaty.

I conclude the protection afforded to the Indians by the treaty provides them with a basis for objecting to the development of the proposed marina and that their objection should be sustained…

There is no question that if the licence of occupation derogates from the treaty right of the Indians, it is of no force and effect. The province cannot act to contravene the treaty rights of Indians, nor can it authorize others to do so…."

More recently, the courts have set out the doctrine of consent through the historic 2014 Tsilhqot’in Nation decision of the Supreme Court of Canada on Aboriginal Title. The court stated:

"90 After Aboriginal title to land has been established by court declaration or agreement, the Crown must seek the consent of the title-holding Aboriginal group to developments on the land. Absent consent, development of title land cannot proceed unless the Crown has discharged its duty to consult and can justify the intrusion on title under s. 35 of the Constitution Act, 1982. The usual remedies that lie for breach of interests in land are available, adapted as may be necessary to reflect the special nature of Aboriginal title and the fiduciary obligation owed by the Crown to the holders of Aboriginal title."

This is an approach that reflects to a certain degree the decisions arising from the Pre-Confederation Treaties cases. It is important to point out the significance of the departure here from the Crown’s mere duty to consult prior to decision making. Does the Aboriginal Title decision go as far as ousting provincial jurisdiction as it has with Treaty cases? No – but it does massively constrain Crown decision making once Aboriginal Title is established. In particular, it says that projects that proceeded without consent, may have to be cancelled once Title is established:

"92 Once title is established, it may be necessary for the Crown to reassess prior conduct in light of the new reality in order to faithfully discharge its fiduciary duty to the title-holding group going forward. For example, if the Crown begins a project without consent prior to Aboriginal title being established, it may be required to cancel the project upon establishment of the title if continuation of the project would be unjustifiably infringing. Similarly, if legislation was validly enacted before title was established, such legislation may be rendered inapplicable going forward to the extent that it unjustifiably infringes Aboriginal title."

It is hard to imagine companies authorizing billions of dollars on the capital costs of LNG projects with this total uncertainty. The court provides the answer to this uncertainty in its direction to how governments and companies should proceed even prior to Aboriginal Title being established – get First Nations consent:

"97 I add this. Governments and individuals proposing to use or exploit land, whether before or after a declaration of Aboriginal title, can avoid a charge of infringement or failure to adequately consult by obtaining the consent of the interested Aboriginal group."

Given these powerful statements from the courts on both the Treaty Rights at issue as well as the consent principle (that is reinforced by the 2007 United Nations Declaration on the Rights of Indigenous Peoples discussion on free, prior and informed consent), it has been surprizing to see how the LNG proposal for Saanich Inlet has unfolded – seemingly without meaningful engagement within the Malahat First Nation itself – and with other affected First Nations. That the NEB issued export licences without so much as notice being provided to impacted First Nations is counter to all of the discussion of the courts above.

Premier Christy Clark remains committed to LNG, notwithstanding the total collapse of global energy economics over the past year and a half. She has built her government’s political and economic agenda around its success and has encouraged a gold rush mentality and speculative approach to LNG development across the province. However, oil was valued well over $100/barrel in the summer of 2014 and in recent months it has been below $30/barrel and the price of much of the LNG market is indexed to the price of oil so this sudden drastic drop severely challenges LNG economics and its enormous capital costs for building plants and pipelines.

Steelhead LNG says it remains on track for the Bamberton LNG project and is continuing to pursue it. The Malahat First Nation has gone through a change in government after the resignation of former Chief Michael Harry. The new government, led by Chief Caroline Harry, recently dismissed the trustees of their Malahat Investment Corporation along with the First Nation’s chief executive officer, chief legal officer and chief financial officer.

While economic and political dynamics appear to be deeply unsettled around this proposal, what is clear in all of this is the need to approach decision making about the use of the lands and waters around the Salish Sea in ways that are consistent with the Treaty Rights and Aboriginal Title of the Indigenous Peoples that have called it home for millennia.

Doug White is an elected Councillor in Snuneymuxw First Nation, Director for Pre-Confederation Treaties and Reconciliation at Vancouver Island University.