Have energy companies made secret deals with B.C. First Nations leaders?

Spurred on by accusations of secret deals with their leaders, several B.C. First Nations have launched lawsuits and occupation camps that threaten to halt energy giant Kinder Morgan’s Trans Mountain expansion and other pipeline ventures. These conflicts show why consent from the entire community is crucial when it comes to winning aboriginal approval for resource megaprojects

A special investigation by Discourse Media

In February 2015, when Andrew Genaille walked into his local coffee shop in Chilliwack, he didn’t expect to see two men from Kinder Morgan Canada Ltd. They were waiting to meet the elected chief and council of his First Nation. Until then, Genaille thought his leaders opposed the Trans Mountain Expansion Project, whose proposed oil pipeline route runs through their small reserve near Hope.

“When we asked them, they would tell us that no, they weren’t negotiating,” Genaille explains in the lobby of Indigenous and Northern Affairs Canada’s downtown Vancouver offices. “They were absolutely against the pipeline.”

 A soft-spoken actor in his early 30s, Genaille sits on the edge of his seat as he talks. He’s eager to share the challenges he’s been facing in his home community, but he also appears tired, worn down from years of bickering with his band council.

 “There was a sign on one of the doors to their side rooms that said, ‘Peters First Nation,’ and inside were two white guys in [suits],” Genaille recalls of his visit to the coffee shop. He went out to the parking lot and saw his chief, Norma Webb, and council arriving at the meeting, which they confirmed was with Kinder Morgan Canada. “It was just me stumbling upon it,” Genaille says.

 He later learned that the Peters First Nation council had been negotiating a so-called mutual benefit agreement with the Canadian division of the Texan energy titan for much of the previous year. Stretching more than 1,000 kilometres, the $7.4-billion Trans Mountain Expansion Project will twin an existing pipeline from Edmonton to Burnaby. Construction is expected to start in September.

Pipeline negotiations are often confidential between companies and First Nations leaders. But many indigenous nations have a tradition of making decisions by getting the whole community involved. In its landmark 1997 Delgamuukw decision, the Supreme Court of Canada defined aboriginal rights as communal in nature, meaning that all members of a First Nation should have a say. So when news of a confidential deal breaks, it’s common for community members to become outraged—frustrated that they weren’t included in the decision.

This culture clash has played out along Kinder Morgan Canada’s planned pipeline route and elsewhere in the province. Besides fuelling division within bands like Peters, it has prompted First Nations members to take their grievances to court, potentially tying energy projects up in the legal system for years. Seven B.C. First Nations on the Trans Mountain route are trying to stop the pipeline expansion in court, claiming they weren’t properly consulted. This is the same legal strategy that killed Enbridge Inc.’s Northern Gateway Pipeline proposal last year.

But even within First Nations communities that inked deals with Kinder Morgan Canada, a lack of trust in the community’s consultation process has pushed some grassroots members to create occupation camps blocking access to their traditional territory. All of this strife puts investments in resource development at risk.

So, what can be done? Some experts and band members believe the best way to ensure project certainty is for companies to make informed consent a priority early on, by consulting everyone in the community.
 
MILLIONS EXCHANGED, BUT SOME BAND MEMBERS STILL ANGRY

In early 2012, before Kinder Morgan Canada filed an application to twin its existing pipeline, it asked the federal government which aboriginal communities it had to talk to. Just over a year later, the company received a list of about 130 B.C. and Alberta indigenous groups that the feds said it would need to consult before proceeding with the proposed Trans Mountain Expansion Project.

The government went a step further by classifying each aboriginal community according to how much consultation it thought they deserved. The tiny Peters Band, with its 12 homes and 42 registered adult members, was owed deeper consultation because it sat directly in the path of the pipeline expansion.

Kinder Morgan Canada took the list and hit the ground running. As of this May, the company had signed mutual benefit agreements (MBAs) with 51 aboriginal groups on or near the pipeline route, including the Peters First Nation, sharing some $400 million in financial benefits. On the Trans Mountain project website, Kinder Morgan Canada says it has had more than 30,000 points of contact with aboriginal communities, through meetings, phone calls and emails. Having followed the government’s instructions, it appears that the company has met its legal duty to consult.

But in some communities, it’s a different story. Although Kinder Morgan Canada consulted deeply with the Peters Band’s elected officials, Genaille says no one did the same for the band’s membership—until he stumbled on the meeting he claims the community was unaware of.

The council “didn’t follow due process to that point. Even after that point, it became an issue,” Genaille says. “Under due process, they do have to share information with the band membership. You go in and you get to look at the documents, or you get to request the documents, and they have to hand it over to you. But they didn’t do that.”

The secrecy is partly due to a confidentiality provision in the MBA negotiated between the Peters Band and Kinder Morgan Canada. The agreement, worth roughly $15 million over 20 years, wasn’t made public, but Discourse Media has obtained a draft copy. It prohibits Kinder Morgan Canada or the Peters Band from sharing the financial details, “except as reasonably necessary for the Community Ratification Process.”

The Peters First Nation did have a ratification process: a community vote held in December 2015, just before the deal was ratified. But according to the draft agreement, council had originally intended to sign the MBA on February 20, 2015; that same month, Genaille discovered the meeting with Kinder Morgan Canada. “Which means they didn’t have any intention of changing anything or putting any concerns a band member has in the MBA,” he says.

Once it was determined that there would be a vote, Peters members only received a summary of the agreement, Genaille says. Any band members who refused to sign confidentiality agreements were denied entry to the community meetings leading up to the vote, he adds.

“Even then, it was still, ‘Well, I want to see the documents that I’m agreeing to or disagreeing to,'” Genaille says. “It’s supposed to be full and informed consent. And if you’re not being shown the documents, that’s not informed consent.”

Along with Genaille, band member Samantha Peters attended the community meetings. “They wouldn’t even put it on a PowerPoint presentation to let us even see it,” Peters recalls. “So I said to them, ‘Well, how the hell are we supposed to even comment on an agreement that we can’t see? This is bullshit. All you guys are doing is just notifying us about what you’ve done.'”

The MBA draft details several cash payments, including one of $2.5 million, $250,000 for community development, $1.8 million to purchase construction equipment and a $500,000 payment as part of a legacy settlement agreement related to the original 1953 Trans Mountain Pipeline route.

The document states that the Peters Band will also receive $500,000 annually throughout the life of the project once it’s active. In exchange for these benefits, the band sent a letter to the National Energy Board (NEB) consenting to the pipeline expansion and promising not to join any legal challenges against it.

In January 2016, the three-member Peters Band Council disbursed $30,000 cheques to all 42 band members, including themselves. Genaille accepted the money, even though he’s still against the project. “It’s my money,” he says. “They’re handing it out. Why would anybody turn that down? One has nothing to do with the other,” he contends, adding that he used the money to buy solar panels for his home.

Peters also accepted the $30,000, but she says will put it toward suing the band over internal governance issues that go beyond the Kinder Morgan Canada deal.

CLASHES OVER CONFIDENTIALITY COMMON IN PIPELINE NEGOTIATIONS

The same confidentiality provision that caused tension in Peters has left several other First Nations along the Trans Mountain route divided. Freelance business consultant Carl Archie is a member of the Canim Lake Indian Band near Kamloops. His band is one of 17 communities that make up the broader Secwépemc Nation in B.C.’s Interior, many of which, like the Peters Band, were owed deeper consultation by Kinder Morgan.  

Archie, 27, sits in a hotel bar in downtown Kamloops. He’s sharply dressed, articulate and wiser than his years suggest. Archie isn’t necessarily opposed to the pipeline expansion, though he has concerns for the environment. He mainly wants to discuss the impact that the negotiations have had on Secwépemc communities.

“Kinder Morgan was successful in dividing our communities on a community-by-community basis and getting them to approve [the project], and has also been successful in having our communities keep secrets from each other,” Archie says. “So signing non-disclosure agreements when we’ve got neighbouring communities who in most cases are family with each other [and] can’t even legally discuss the terms of an agreement they’ve come up with with Kinder Morgan.”

Not everyone in Secwépemc territory agrees that the consultation process is flawed. Last December, Kinder Morgan Canada announced an MBA with Tk’emlúps te Secwépemc (formerly the Kamloops Indian Band), one of the largest Secwépemc communities, whose reserve lands lie in the path of the pipeline route. Chief Fred Seymour, who supports the project, confirms that the band has received $3 million that is “sitting in a trust…earmarked for different areas.”

Tk’emlúps negotiated the agreement for about six years, Seymour says. But unlike the Peters Band, it didn’t hold a community vote. “Probably about 100,” Seymour replies when asked how many of his band’s 1,300 members he consulted before signing the agreement. He doesn’t see that as a problem. Seymour says Tk’emlúps consists of 13 family groups; in his opinion, those 100 people accurately represent the views of the broader community.

“You can’t keep them all happy,” Seymour says of band members unsatisfied with the agreement. “As long as you keep 95 per cent of your membership happy, it’s going to create employment.” Seymour won’t specify how much local work he expects the project to generate, but he says that at least 25 per cent of the construction jobs on one segment of the pipeline will go to Tk’emlúps members.

But Archie reckons there’s a chance the courts could overturn the MBAs in Secwépemc because of poor process. “I’m not sure what [the Tk’emlúps] approval process was,” he says. “But having been a consultant doing community facilitation, I know that a lot of community members, even living on reserve, feel like they’re not consulted adequately.”

Such conflict in First Nations communities isn’t unique to negotiations involving Kinder Morgan Canada. Last summer, two hereditary chiefs on Haida Gwaii had their titles stripped at a historic potlatch ceremony for secretly supporting Enbridge’s failed Northern Gateway Pipeline proposal. Discourse Media examined a letter signed by the chiefs addressed to the NEB in support of the project. Another document called a “Term Sheet” showed that the chiefs were offered $90,000 for “cultural activities,” but it was never proven that they accepted those funds.

This past October, confidential draft documents were leaked onto social media, sparking anger in the Gitxsan Nation of northwestern B.C. One signed document titled “Trustee Resolution of the Amdimxxw Trust” showed that a group of Gitxsan hereditary chiefs accepted about $6 million in public funds from the B.C. government in exchange for the Gitxsan Nation’s support for TransCanada Corp.’s proposed Prince Rupert Gas Transmission line. Some Gitxsan members are now seeking to stop that project in court by claiming they weren’t consulted.
 

LACK OF CONSULTATION LEADS TO LAWSUITS

The governance dispute shaking the Peters First Nation has triggered a lawsuit that could threaten the deal between the band and Kinder Morgan.

According to documents filed in B.C. Supreme Court last December by Andrew Genaille and his sister, Lisa Genaille, the Peters Band Council signed a letter of understanding with Kinder Morgan Canada in July 2014. This meant the company provided funds for the council to pay for consultants, legal fees, environmental studies and negotiation meetings.

Genaille accuses the council of paying itself from July 2014 through late 2015 for meeting with Kinder Morgan. Charging that it has refused to provide accounting documents related to these funds, he’s suing the council over the disbursement of the $30,000 cheques, which he claims it had no permission from the community to give out.

All of this looks like an internal squabble for the Peters Band, but Genaille believes Kinder Morgan is accountable, too. “They think that as long as they have the documents, they can just go ahead,” he says. “The problem with that thinking is the fact that…at a certain point, the membership can actually get the decisions of the council overturned.”

How so? “There is a possibility that a judge can go, ‘Yeah, you broke your fiduciary duty. You profited from this. I’m overturning the decision,'” Genaille says. “That would actually stop the pipeline from going through the Peters First Nation. And that would be a problem for Kinder Morgan.”

Chief Webb didn’t respond to questions or provide an interview, but she stated in an email that “there was extensive consultation with the Peters First Nation membership” leading up to the deal. Trans Mountain, the Kinder Morgan Canada subsidiary building the pipeline expansion, didn’t reply to several requests for comment.

Cynthia Callison, an indigenous lawyer with expertise in land rights, doesn’t think a case like Genaille’s has a strong chance of stopping the pipeline expansion. “Even if there was found to be some wrongdoing [by the Peters Band Council], I’m not sure that that would impact the project,” Vancouver-based Callison says. “You’d have to really be able to attack the band council resolution that approved the agreement. It’s a long, hard road.”

PROTESTS MOVE TO THE LAND

In Secwépemc territory, Kanahus Manuel isn’t waiting for a court decision. The 40-year-old mother stands on the industrial outskirts of Kamloops beside the North Thompson River, beneath which Kinder Morgan Canada plans to drill as part of its pipeline expansion. Manuel, a full-time indigenous rights activist, is leading a group of Secwépemc people planning to build occupation camps on their territory in an effort to stop the construction.

In her view, the band council chiefs who signed mutual benefit agreements, like Tk’emlúps Chief Fred Seymour, didn’t have the right to make a deal that affects the traditional territory of the broader Secwépemc Nation.

“It’s really undermining our authority as the grassroots people, as the collective title holders,” Manuel says. “Not one band or one person can sign away any of our land. And by challenging that, that’s rocking that boat and creating uncertainty with investors.”

Business consultant Archie explains that although bands like Tk’emlúps are their own communities, they are also one of 17 that make up the Secwépemc Nation of more than 10,000 members. Individual bands are managed by an elected chief and council under the Indian Act, while the Secwépemc Nation as a whole was once governed by a hereditary structure that still has influence today.

And because the Trans Mountain Expansion Project route crosses the traditional territory of the broader Secwépemc, and not just the reserve lands of Tk’emlúps, Manuel and others don’t recognize the authority of band chiefs.

“I think it’s partly lack of understanding on Kinder Morgan’s part,” Archie says. “The federal government clearly has a part to play. But also, our Secwépemc leaders have an obligation to uphold our nation, and they have chosen not to do that, for whatever reason. And I think the process that was used is unfitting of a nation as large as the Secwépemc Nation.”

With her Kamloops occupation camp, Manuel is taking a cue from several northern B.C. First Nations that have used similar tactics for years in their traditional territories. In the northern Interior, the Unist’ot’en Camp near Houston is blocking the path of two liquefied natural gas (LNG) pipeline proposals, TransCanada’s Coastal GasLink and Chevron Corp.’s Pacific Trail Pipeline. Two hours’ drive east, the Madii Lii Camp sits on the proposed route of TransCanada’s Prince Rupert Gas Transmission line. And on the north coast, by Prince Rupert, members of the Gitwilgyots tribe are occupying Lelu Island, the proposed location of the Pacific North West LNG terminal, whose partners include Malaysian state-owned oil and gas giant Petroliam Nasional Berhad (Petronas).

The camp occupiers “do not recognize that those leaders who signed on their behalf have the authority to do so,” says Jacob Beaton, a communications consultant of Tsimshian Nation descent based in the northern Interior village of Hazelton. “Therefore the certainty that government and companies seek through those signed agreements doesn’t exist.”

GETTING TO INFORMED CONSENT
 
Beaton has worked for close to 20 B.C. First Nations involved in pipeline negotiations with companies like Chevron, Kinder Morgan Canada and Trans­Canada. His role has mainly been helping indigenous leaders with the rigorous task of informing their membership about projects and gaining consent to sign agreements.

It’s an even bigger challenge when First Nations haven’t resolved internal conflicts such as who can speak for the broader membership, Beaton says: “Something I’ve seen over and over again is that nations really need to solve their governance issues before they’re able to take on controversial decisions.” But these problems are complex and take time and money to fix.

Beaton says he’s tried to convince the federal and provincial governments and the energy sector to fund the kind of comprehensive community engagement required to reach consent, but so far, he’s come up empty. “They don’t understand that when an elected chief signs on behalf of hereditary chiefs in a place where they have not OK’d that, where the nation has not said yes, that causes an incredible amount of conflict,” he observes. “And that directly impacts that project.”

To avoid community infighting and ensure that resource projects go ahead, Beaton says there must be engagement that gives every member of the band a chance to have their voice heard by the leadership.

Beaton estimates that an effort resulting in an informed vote costs between $300 to $400 a member for communities smaller than 500 and $80 to $250 a person for larger ones. This can add up to hundreds of thousands of dollars. It seems expensive, but for megaprojects that cost billions to build, it’s a small price to pay upfront for project certainty and long-term peace in the community.

“It cannot be overstated how important it is for resource companies to engage early and often,” says Pepita McKee, founder of Impact Resolutions, a Vancouver consulting firm specializing in community and stakeholder engagement. McKee advises corporations to consider a series of community engagement exercises “to better inform them of the concerns, issues and expectations of First Nations.”

They must also be patient, according to Beaton. “Part of the approach that I’ve seen that does not work is the backdoor deals, including taking leaders away from their territory to places like Vancouver to have meetings,” he says. “I’ve seen projects where those bills can be racked up very quickly—the flights, the hotels, the consulting, the pressure to sign now. But a lot of times First Nations leaders are not willing to sign now. So those processes tend to be drawn out over a number of years, and the costs add up.”

Even if companies like Kinder Morgan Canada convince First Nations leaders to sign agreements, if those leaders didn’t include their members in the decision-making process, the result can be a legacy of conflict and bad blood—as in Peters. “The band had an opportunity to engage the community members, and they failed miserably,” member Samantha Peters says. “We’re so fractured down here that you can’t really get all of us into one meeting room. People will call the cops on each other. It’s that bad.”

Fellow band member Andrew Genaille has some advice for Kinder Morgan and any other company wanting to cut deals with First Nations. “What they have to realize about First Nations reserves is…there’s one family in power, and then everyone else has no say in what’s going on,” he warns. “What they should do if they really want to make sure that they have informed consent when the vote happens, is they need to identify the individuals that don’t have a say and sit down with them.

“But that’s up to them,” Genaille says.