Bennett Jones
Produced by Serge Dupont, Will Osler and Sharon Singh
New infrastructure projects will be an important part of Canada's recovery from the COVID-19 crisis, and many will be situated on the path of reconciliation with Indigenous peoples. Listen to what the evolving legal, policy and business environments mean for engagement with Indigenous communities on investment in infrastructure projects in Canada. Serge Dupont hosts this discussion with Will Osler and Sharon Singh, all of Bennett Jones LLP.
Transcript
Speaker 1:This is Business Law Talks, the Bennett Jones podcast series that sits at the intersection of law and policy. Join our lawyers and advisors as they examine today's most complex issues to help guide companies doing business in Canada.
Serge Dupont:Welcome to Business Law Talks. I'm Serge Dupont, Senior Advisor of the Public Policy Group of Bennett Jones, and moderator for today's podcast. This episode will share expertise and experience on engagement with indigenous communities on investments in infrastructure projects in Canada.
Serge Dupont:I'm joined by Will Osler, partner from the Calgary Office of Bennett Jones, and Sharon Singh, Partner in our Vancouver office.
Serge Dupont:Will practices in the areas of public and private mergers and acquisitions, securities, as well in corporate governance with a particular focus on the oil and gas sector.
Serge Dupont:Sharon advises clients on Aboriginal law, indigenous and community relations, regulatory governance, and environmental law, in the infrastructure, mining, energy, and construction sectors.
Serge Dupont:New infrastructure projects, water, transportation, and energy will be a necessary part of a recovery from the COVID-19 crisis. Over the medium to long-term, it will also be core to raising Canada's productivity, expanding our trade, reducing our carbon footprint, and adapting to climate change.
Serge Dupont:There's widespread realization today that infrastructure, and this is our subject, must also be situated on a path of reconciliation with indigenous people. The impact of infrastructure projects, positive and negative, can include impacts on indigenous rights and interests. All of the impacts have to be built into the planning, the review and the execution of the projects.
Serge Dupont:Sharon, I want to start with you. You've been at the table with indigenous communities at Rio Tinto and now with clients as a partnered venture. What has changed most meaningfully in the legal environment over the past three to five years for indigenous engagements on infrastructure projects?
Sharon Singh:Thanks Serge. I think, in general, there has been no change in the consultation obligations in the context of Aboriginal rights or Aboriginal title claims both proven or unproven. But what we have seen in case law are more specific examples of what meaningful consultation and accommodation looks like.
Sharon Singh:So really, it's been the continuation of the jurisprudence in this area. Where I think there is actually a more, I would say interesting development is really the legislative development piece, and also the policy development piece. And by that I reference legislation such as Bill C-69, the Impact Assessment Act, and in British Columbia, our Environmental Assessment Act that has been recently revitalized and modernized.
Sharon Singh:I also reference the development of enabling a legislation in British Columbia that looks to implement the United Nations Declaration on the Rights of Indigenous Peoples through what I'll call the DOTROIP Act. And similarly the Federal Government's intention to do the same.
Sharon Singh:And if I go back to Bill C-69 and in the Environmental Assessment Act in BC, what they do is essentially increase the opportunities for indigenous participation, cooperation, partnerships in the government's decision-making process. They also provide enhanced recognition of indigenous rights and interests and provide for joint decision-making models.
Sharon Singh:And in terms of UNDRIP, it's still quite early days. You will find a divergent range of opinions as to what UNDRIP does do and does not do and what this enabling legislation will herald and what it will not herald.
Sharon Singh:But what I will summarize this question in terms of answer as, essentially the criteria for meaningful participation and engagement remains the same, be it an equity ownership, be it in your traditional benefit agreement format, but there's nothing that has changed in that particular landscape.
Sharon Singh:There is a fundamental shift in our thinking in terms of what economic reconciliation looks like and that really does go beyond the simple benefit agreements framework. And I think we can delve into those issues a bit later.
Serge Dupont:So Sharon, you've described the state of the law, and you're also aware of the business practices, and are those both evolving in steps such as there are in fact some positive and constructive developments on the ground?
Sharon Singh:I would say from my experience, the law is behind the practices on the ground in the vast majority of instances. And perhaps that's my experience with the clients that I deal with.
Sharon Singh:But it is not news to us in industry, it is not news to many of the communities that we deal with, that you must engage early and not just when you spin an application for a project description, that is the recipe for disaster.
Sharon Singh:And so in terms of many of these sort of phases that have been introduced in legislation for early engagement and meaningful participation, that's being done on the ground in, I would say, a lot of the larger projects led by ordinance that we deal with at Bennett Jones.
Sharon Singh:However, I do recognize that there are many instances as well, where the good practices that have been developed by many are not being followed by other proponents. And it is those examples that require essentially these principles or best practices then to be codified. And that is, I think, what is happening with some of the sources of this legislation and interest for this legislation.
Sharon Singh:But I do want to add that there are many pieces of uncertainty with the acts that have been implemented and are being implemented, that the answers to which we will only tell with time. But in short, yes, I believe that the practices are actually far more advanced than legislation or legislation is actually catching up.
Serge Dupont:Okay, thank you. Will, you work closely as well with infrastructure proponents and what they appreciate, as kind of suggested by Sharon, that a strictly legal approach to engagement with one might call the checking of the box is not likely to be very productive. How do you see businesses thinking about envisions and engagements and how has that changed?
William Osler:Right. Thank you, Serge. And this will pick up on much of what Sharon was describing. The smart businesses are the ones that are actually thinking about engagement. And those are the ones that understand that any strategy that looks like a box-checking exercise is not likely to succeed.
William Osler:Project proponents need to establish relationship with the various rights holders early on. They need to be transparent and they need to build trust. This requires commitment and can, and usually does take a great deal of time and investment. It's not a straight path and project proponent should prepare to be surprised.
William Osler:Any list for engagement should include a number of basic steps. You need to engage early, you need to be respectful. You need to engage first, then listen, then plan. You need to spend the time.
William Osler:You need to get to know the nation and its leadership. Understand that that may change from time to time. And you have to bear in mind that each nation is unique. No one-size-fits-all in the areas we're talking about.
William Osler:If there are treaties, know the treaties, and you have to know the law, every step of the way. Keep in mind that relationships that are created today and maintained can be built on tomorrow. And any partnership and the sharing of benefits will have the best chance of meeting not only legal and regulatory thresholds, but also business thresholds for success.
Serge Dupont:Will, there are good examples of the past of mistrust, broken relationships, and project setbacks, or even abandonment. There also been examples of partnerships in widely shared benefits.
Serge Dupont:Can you give us an example of a recent success story and some of the ingredients of that success?
William Osler:Sure. Well, the success story I always think of Serge is Alberta PowerLine were seven indigenous communities in Alberta acquired a 40% equity stake in the Fort McMurray West Electricity Transmission Project in 2019.
William Osler:But I'll start in 2014 when Alberta PowerLine, which was a partnership between Canadian Utilities which is an ATCO company and Quanta services was selected to design, build, own, and operate the power line.
William Osler:At that stage, the possibility of a future sell-down to indigenous communities was already being considered. And for that reason, but for other reasons as well, the route design and construction process included very extensive consultation and engagement with indigenous communities along the route.
William Osler:There were more than 3000 face-to-face meetings. And the feedback at those meetings was incorporated into the transmission-line route and the construction plans. So engage, listen, then plan along the lines of what I was talking about before. The sell process for Alberta PowerLine was launched in early 2019 under the guiding principle of meaningful, indigenous community ownership. And that principle was reinforced at every step of the way of the process.
William Osler:First thing I would point out is that this was the right asset. The power line generates stable, long-term 35-year distributions to its owners through a tariff agreement with the Alberta Electric System Operator. That's an important point to remember.
William Osler:And from a quick structural point, this transaction featured an option provided to indigenous communities to acquire up to 40% of the project. So, this was the right asset. The relationships had been established and maintained from the outset. And as a result, the option process led to seven indigenous communities exercising that option to acquire the full 40%.
William Osler:Success story? Well, yes. The sale to indigenous communities has enabled them to become direct owners and participants in Alberta's energy sector. And it provides them with a stable source of income they can bank on for many years to come.
Serge Dupont:Will, you mentioned obviously the equity investment by seven First Nations, and to meaningful investment. What happens when, I suspect as in this case, those communities at the beginning of the process, don't have the capital to acquire that interest? Are debt markets supportive? Or how does that work for them to actually be able to participate to that extent?
William Osler:They are, if the project is right. And in the case of Alberta PowerLine, a long-term, 35-year tariff agreement with the ISO, making regular distributions to the owners. Yes, financing was readily available for the indigenous communities that were interested in participating in that transaction without question.
William Osler:But also look to the province of Alberta, in my case. And there certainly can be a role for the new Alberta Indigenous Opportunities Corporation, which was launched late last year. Under the terms and mandate for the AIOC, the government of Alberta has pledged up to one billion through a loan guaranteed, [capacity 00:00:12:23] grant program, and we're already starting to see some of the concrete first steps that that corporation is taking. Then of course, at the federal level, the Federal Government has been clear that in the case of TMX, it is also open to facilitating participation for communities along the pipeline and Marine routes.
Serge Dupont:Sharon, do you want to ... Anything to add on that point? Because we've also seen some transactions take place and how that issue of the financing is addressed.
Sharon Singh:I want to pick up on what Will has said in terms of ... In the example of ATCO, the money was available. And typically, some of the projects that are, I would say, nation-driven in terms of their requirement for equity ownership or their desire for equity ownership, the money is not always available.
Sharon Singh:Even where it may be available, there is an issue of the debt that these nations are burdened with in terms of how will they facilitate the interest payments? If there is a long lead time in terms of just getting some sort of rate on return for that. So there is a role of government, and as Will highlighted, there are a couple of examples. But it's not just about the money in terms of helping find the money, helping service the debt.
Sharon Singh:It's also about facilitating, in terms of the whole government, the internal reconciliation that must be ... that must occur in the nation to ensure that they have the ability to have upbeat, frankly loanable, and to provide those [inaudible 00:13:59] have independent ability to service these interest payments.
Sharon Singh:So when I talk about internal reconciliation, it is about governance in the nations and that differs depending on the nation that you deal with. Obviously, not all nations want equity ownership, and we must remember that. And it goes back to Will's point about, you engage ... Don't come in with misconceptions about what the solution may be.
Sharon Singh:Obviously in BC, there's a lot of nations that are interested in energy generation and the transmission and distribution infrastructure because it meets their priorities and meets their goals. But that's where some nations and all.
Sharon Singh:And I think just linking this all back to the landscape of how the indigenous opportunities, and I guess issues if we want to call them that, intersect with infrastructure.
Sharon Singh:Because not all nations want ownership, or in fact, the project, you will likely have situations where there is indigenous ownership of a project, but other nations will oppose it.
Sharon Singh:And so proponents ... industry proponents must keep that in the back of their minds and I think must be alive to these issues.
Serge Dupont:Before we move to a close, you did mention something really important there. What if, if there is no consent from one or more First Nation, does the proponent have to walk away?
Sharon Singh:I think again, it's a very [vast 00:15:24] specific. We have scenarios whereby we do not have consent. And you have Site C in British Columbia is one example of that. And we have had nations that are for Site C and those that aren't. And here politically it has ... the project has support, and therefore it is proceeding.
Sharon Singh:So in law, we know what the case law states. Consent is not required except for in certain circumstances. But ... And say those circumstances do not exist, politics do come into it.
Sharon Singh:And I think it would be naive of us to say, just because there is no consent in a project that's required, you simply can proceed with it because we've seen ample examples of where the proponent has indeed walked away.
Sharon Singh:So it comes back to the proponent being alive to the issues and noting early in terms of where they're unlikely to achieve consent, what the politics ... and I mean that in terms of the federal, provincial, municipal, and the nations, different nation's politics will be, and it's a risk assessment exercise.
Sharon Singh:So at the end of the day, some proponents will have to walk away because the politics and the body politic will not support it. And others, your politicians will support it irrespective of the fact that you don't have consent on the ground.
Sharon Singh:So with UNDRIP coming into the landscape again, as I did say that ... depending on who you speak to, under the camp of ... well, it actually does not change much. We have the framework established in terms of free, prior and informed consent, but there are others that do say it's changed. So that remains to be seen. And that is again, the uncertainty that has not yet been eradicated by policy and by the government.
Serge Dupont:Okay, great. Listen, to wrap up and allowing both of you, bit more than a soundbite, how would you at the end of the day, summarize prospects for partnerships in the steps for best chance of success on indigenous participation in investment projects? Will, start with you.
William Osler:Thanks Serge. For me, I think the most critical thing is that it needs to be the right asset. Not any infrastructure asset out there in Canada is necessarily going to be a good candidate for the types of things we're talking about. And in particular, meaningful equity participation from indigenous communities. So the good news is that when it's the right asset, you'll know it's the right asset. And when it's not, you'll know that as well.
William Osler:But once you've established that, the project that you are thinking about, that you are a proponent for, fits into so much of what we're talking about here, then I start with some of the things that are driving indigenous engagement in infrastructure protests in Canada. It's a long list, but the highlights for me are the need to have land-use certainty for major projects, the need to reduce legal risk.
William Osler:Indigenous nations interest in securing long-term own-source revenue streams. In many cases, the asset will be in renewables and there's certainly growing demand for new sources of renewable energy. I think of hydro in particular, both in, in BC and in Alberta.
William Osler:And maybe more importantly than that, I believe that companies and their stakeholders are increasingly seeing this is good for Canada on many levels, and just the right thing to do. Projects get built, jobs are created, employment capacity and expertise are enhanced. You've got a long list of political, social, and environmental benefits that are achieved through these kinds of projects.
William Osler:If you agree with those reasons or even any of them, then certainly I think the prospects for success are very, very strong. First steps, next steps ... It goes right back to the beginning, Serge, and you start with some of those key principles we talked about in terms of engagement and how to embark on that process and build those relationships with the long-term in mind.
Serge Dupont:Sharon?
Sharon Singh:I agree with Will. Infrastructure projects do build nations. They have built this nation as we know it in terms of Canada, but they are not the solution for everything. And there may not be the solution for all indigenous participation in infrastructure projects.
Sharon Singh:To go back to what my five points of best chance of success would be, and is to really recap on what Will has said earlier, one, understand the nation. Understand the nation in terms of its governance, its priorities, its goals, and those goals and priorities may shift. And that is something that proponents should be prepared for. These things are not static. Do not come in with a solution. As I said earlier, equity participation is not for everybody. Some nations do want the benefit of it. Other nations may not want the project at all. And proponents and governments need to be prepared for that.
Sharon Singh:Also understand that there are other things that are happening in a nation that don't involve their project. The world does not simply involve around the project that may be forefront of the government or proponent's mind.
Sharon Singh:And by that, I mean internal governance of it within an indigenous nation or amongst surrounding neighboring nations, that is a piece that many nations are dealing with. And that is not something that proponents can have a say in or can get involved in. It may take a long time.
Sharon Singh:So essentially, your best chances of success are to be patient, to do your due diligence, to understand what meaningful engagement, meaningful relations looks like, and not be stuck on a ... the success being the project being built. Because sometimes the success in this instance, maybe getting an early answer that the project has no viability.
Serge Dupont:Thank you, Sharon and thank you Will. You certainly have set out what is a fascinating and complex confluence of policy, legal, and business factors. I want to thank our listeners and we hope it will join Bennett Jones Business Law Talk series again. For more information on our podcasts, infrastructure and indigenous engagement, or to access our COVID-19 Resource Center, please visit bennettjones.com.
Serge Dupont:Thank you.