A new setback in the courts has sent Canadian natural gas producers a message that they still have far to go to find a formula for efficient northern expansion in aboriginal territory.

At the same time as an out-of-court settlement cleared up a lawsuit against the Mackenzie Gas Project (MGP) by the Dene Tha’ of northern Alberta, the neighboring Ka’a’Gee Tu First Nation in the southern Northwest Territories won a protest case against a Paramount Resources development program in the remote Cameron Hills.

Both cases centered on a thorny issue that is repeatedly cropping up in uneasy relations between Canadian industry, governments and aboriginal communities. Both cases sounded the same warning. It is possible to satisfy requirements of the Canadian constitution and high court rulings to consult natives on projects and accommodate their environmental, economic and cultural interests. But high standards of performance will be enforced and making the grade can be expensive.

In the Dene Tha’ case, the price of securing native co-operation with the MGP environmental review was a C$25 million (US$24 million) grant by the federal government to cover community costs of participation and preparation for eventual construction such as job and contractor training (see Daily GPI, July 24). No new money has changed hands yet in the Ka’a’Gee Tu case, although similar participation assistance already adds up to millions of dollars even though the fiercely independent Dene Tha’ band only has 62 officially accepted members.

The Federal Court of Canada ruled that Ottawa’s Department of Indian Affairs and Northern Development went astray by unilaterally softening conditions imposed on the Cameron Hills gas project by a Northwest Territories agency with strong ties to aboriginal communities, the Mackenzie Valley Environmental Impact Review Board. After a lengthy review of Paramount’s drilling and pipeline construction program, the board ruled in 2003 that it was bound to have substantial effects on traditional Ka’a’Gee Tu hunting, fishing, trapping, camping, roving and sacred ancestral territory.

A long list of approval conditions included compensation, environmental mitigation, a community benefits plan, strict reporting requirements and an order for no “irreversible steps” to be taken by industrial activity until the entire package was finished and accepted. The Cameron Hills project is a pioneering 10-year program of drilling and construction to expand the Alberta gas production network into the southern Northwest Territories, with up to 50 wells and an extensive pipeline web.

The development is under way, with successful wells drilled and new pipelines tying production into Paramount’s Alberta assets. But fulfilling the approval conditions turned out to be a slower process, and not least because the Ka’a’Gee Tu refused to disclose tribal secrets for a native traditional knowledge and land use study required by the project approval. The natives insisted that they wanted to be sure their game and wilderness knowledge would not be used by interlopers.

The process took a wrong turn when federal cabinet representatives took a step officially called “consult to modify” after holding meetings in Ottawa with Paramount executives, the court ruled. The company told the court the closed meeting was only a briefing on general development hindrances, rules and causes of delay in the Canadian north.

But the cabinet authorities modified the Cameron Hills project approval conditions, claiming the legislation that created the Mackenzie Valley environmental board allowed higher powers to change northern decisions. The changes softened the conditions and completely scrapped the one prohibiting any industrial activity liable to change the landscape until all the directives were fulfilled. The politicians violated obligations of the federal government towards aboriginal Canadians, the court ruled. The court rejected aboriginal demands for an immediate halt to gas activity in Cameron Hills.

But all concerned were directed to start over again on “meaningful consultations with the view of taking into account the concerns of the Ka’a’Gee Tu and if necessary accommodate these concerns.”

The ruling effectively shut down a shortcut for the federal government to overrule difficult and time-consuming conditions imposed on gas developments by northern regulatory agencies. Industry leaders and lawyers are poring over the ruling, looking for guidance on acceptable ways to behave in aboriginal country and making no public comment. Only time will tell when a new formula for advancing development will emerge or how much it will cost.

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