Canada’s Supreme Court recognizes Wet’suwet’en law. So how is Coastal GasLink moving ahead?

The crisis unfolding on Wet’suwet’en territory went from simmer to boil in recent weeks, and those on the ground say the fight against the Coastal GasLink project is far from over.

The conflict is about the right to build a natural gas pipeline through the nation’s unceded land. Coastal GasLink reached agreements with First Nation band councils along the project’s route, including Wet’suwet’en bands, and British Columbia gave the company the green light to build in 2014. However, hereditary Wet’suwet’en chiefs oppose the project and their supporters are attempting to block access to the construction site.

Supporters of hereditary chiefs can point to the Supreme Court of Canada case Delgamuukw v. British Columbia, which found the nation’s hereditary leadership has jurisdiction over its traditional territory, as justification for their efforts to block the pipeline. But, because the company was issued permits by the province, the B.C. Supreme Court granted Coastal GasLink an injunction that the RCMP is using to clear Indigenous people from their land to allow construction to continue.

Images of militarized police hacking through the door of a home to arrest Indigenous land defenders and journalists at gunpoint forced the issue to national attention last month, while solidarity actions fanned out across the country to show support for the Wet’suwet’en. The crisis hasn’t yet reached the point of the February 2020 land defence, which saw major trade corridors shut down in solidarity with the nation, but the situation now unfolding is a standoff with room to intensify.

The spark behind the latest round of conflict came on Nov. 14 when the Gidimt’en clan, one of five clans of the Wet’suwet’en Nation, announced it would enforce a January 2020 eviction order demanding Coastal GasLink remove its employees from the nation’s unceded land, which spans more than 22,000 square kilometres. The company held firm, kept its workers in place, and the nation closed access to its territory.

The RCMP was also deployed to Wet’suwet’en territory to enforce a court injunction designed to prevent interference with the construction of the pipeline.

So far, dozens have been arrested and removed from the territory just as the conflict enters a new phase — one driven by economic pressures colliding with Indigenous rights — as the over-budget pipeline’s construction approaches the Wedzin Kwa (Morice River). The company plans to drill under the river, which is an important water source that provides clean drinking water and is a spawning ground for salmon.

Shay Lynn Sampson, a Gitxsan land defender, was in the “Tiny House” RCMP agents recently broke into. The Gitxsan Nation are longtime allies of the Wet’suwet’en. Sampson told Canada’s National Observer RCMP officers surrounded the cabin that she, Gidimt’en Checkpoint spokesperson Sleydo’, and two journalists were in and announced they would enter under the authority of the court injunction to make arrests.

“They used axes that they found within the camp and a chainsaw they found within the camp to break down the doors, and then had their guns pointed at us from there on out,” Sampson said.

Sampson said it's important for the Canadian state and provincial governments to understand Indigenous peoples “aren't going to take this abuse any longer” and that projects like Coastal GasLink will be fought against when consent has not been given.

“There's no free, prior, and informed consent,” she said. “There's no will for … from the hereditary chiefs for this pipeline to go through, and especially now that they continually arrest our people at gunpoint.”

Across Canada, solidarity demonstrations have been launched to support the nation. Hundreds gathered outside the RCMP’s Quebec headquarters in Montreal over the weekend for a rally, people blocked the Highway 6 bypass in Caledonia, and members of the Haisla Nation staged a walkout of the LNG Canada Kitimat site in support. The Union of British Columbia Indian Chiefs has also signalled its support, as has Amnesty International.

“I think it's similar to the way people pushed back in 2020 after the raids that happened on Wet'suwet'en territory, that all these people are rising up because they understand the way that we're connected as Indigenous people,” said Sampson.

Why the Delgamuukw ruling matters

Not having the consent of the Wet’suwet’en Nation’s hereditary chiefs to build through unceded territory is a problem for several reasons. Free, prior, and informed consent is a requirement of the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), something that Canada and B.C. have both passed laws to ensure is met. UNDRIP sets out minimum standards that should be followed to protect Indigenous rights and culture.

B.C. signed into law its Declaration Act mandating the province align its laws with UNDRIP in November 2019, months before the last major flare-up over Coastal GasLink. Similarly, in June, Canada formally approved its version of the declaration act, which “requires” the federal government to “take all measures necessary to ensure the laws of Canada are consistent with [UNDRIP].”

Wet’suwet’en hereditary chiefs are actively fighting Coastal GasLink’s efforts to build a pipeline through its territory. Because the land is unceded, it is crucial to understand the Wet'suwet'en as a sovereign nation that never gave up its self-determination. Its governance structure, based on a clan and house system with hereditary chiefs, has existed for time immemorial and continues to exercise authority over its territory. It is a separate governance system from the elected band council chiefs imposed by the Indian Act.

In previous conflicts between Coastal GasLink and the Wet’suwet’en Nation, a lot of media attention has been paid to elected chiefs and hereditary chiefs because Coastal GasLink signed agreements with the elected chiefs of 20 band councils along the pipeline’s route. While no community is a monolith and there are divisions within the nation over Coastal GasLink, there is no dispute over which governance structure has the legal right to consent.

Coastal GasLink told Canada’s National Observer the pipeline is “authorized and fully permitted” and “was approved after a rigorous and nearly seven-year process under all applicable laws and regulations.” The company did not answer multiple questions relating to opposition from hereditary chiefs or what financial risks it might be exposed to if it continues to build without permission from hereditary leadership.

Over 20 years ago, the Supreme Court of Canada ruled in its landmark case Delgamuukw v. British Columbia that Canada did not extinguish title to the land itself. That case was decided in 1997, and West Coast Environmental Law staff lawyer Gavin Smith explains, the decision recognized the nation’s hereditary governance structure.

“The Supreme Court of Canada explicitly recognizes that the clan and house system is the fundamental organizing premise of Wet'suwet'en society, which gives rise to its title,” he said.

That means Wet’suwet’en law is recognized by Canada’s highest court, and authority over the nation’s land lies with the hereditary chiefs. Smith notes that Indigenous rights are not created through any Canadian legal document. Rather, the rights flow from the fact the nations existed before Europeans arrived — with their own existing laws, systems of governance, and connections to the land.

“When we look at what's happening with Coastal GasLink, in my view, the conflict is largely resulting from the long-term failure of the Crown, both British Columbia and Canada, to give meaningful, practical recognition to the promise of recognition for title and rights of Indigenous peoples of the Wet'suwet'en,” said Smith.

For years after Delgamuukw was decided, Crown governments argued that title to land referred to things like fishing holes and other distinct uses, sometimes referred to as a “postage stamp” theory of title, rather than the entire territory itself. That argument was killed by the Supreme Court of Canada’s 2014 Tsilhqot’in decision, which found that title extends to a nation’s entire territory.

The Delgamuukw and Tsilhqot’in decisions are important precedents for nations with unceded land because they offer clearer legal standing to negotiate with Crown governments. They’re also decisions with bearing across the country, given that most of B.C., the Maritimes, and huge sections of Ontario and Quebec never signed treaties, meaning the land is stolen. Even in places where treaties were signed, the intent was generally to outline how land would be shared, not a surrender of title.

Sampson says consent for a project has to be genuine and can’t be coerced.

“Consent is not when you receive continual pressure from the province, from the state of Canada and from militarized police,” she said. “They can't point guns at you and just expect you to change your mind. That's not how this works.”

A spokesperson for ​​Crown-Indigenous Relations Canada Minister Marc Miller told Canada’s National Observer that while Coastal GasLink and RCMP enforcement are under provincial jurisdiction, the federal government is committed to negotiations with the nation.

“The Hereditary Chiefs, the Government of British Columbia and the Government of Canada are discussing how to implement Wet’suwet’en rights and title, as noted in the Memorandum of Understanding signed on May 14, 2020,” said spokesperson Jordan Ames-Sinclair.

“As negotiations proceed on the affirmation and implementation of Wet'suwet'en rights and title, the Wet'suwet'en collective — hereditary chiefs, elected representatives, and community members — will need to work to develop their own governance, with the support of Canada and British Columbia.”

Financial pressure growing

Coastal GasLink is being built by TC Energy. Last year, the Calgary-headquartered energy giant sold its majority stake in Coastal GasLink to Alberta and South Korea’s public pension plans, managed by investment companies AIMCo and KKR, respectively.

The sale was important because it not only generated $600 million for the company, it triggered a financing scheme with dozens of banks that allowed the company to immediately tap about $2.1 billion to pay for the project’s construction. Banktrack identifies 27 financiers of Coastal GasLink that, together, have given the project a $6.4-billion loan estimated to cover 80 per cent of the project’s cost. Additionally, RBC, BMO, Scotiabank, CIBC, and TD provided $200 million worth of working capital to Coastal GasLink.

Among the 27 financiers are Canada’s big five banks, along with the National Bank of Canada, JP Morgan Chase, Bank of China, Bank of America, South Korea headquartered KB Financial Group, Japan-based Mizuho, Mitsubishi UFJ Financial Group, and many others. Export Development Canada is also listed as a financier.

“Any bank continuing to finance Coastal GasLink is complicit in the rights violations that are occurring against the Wet'suwet'en, land defenders and journalists by the project and the militarized enforcement agencies like the RCMP,” said Stand.earth climate finance director Richard Brooks.

The purpose of the pipeline is to feed LNG Canada’s Kitimat facility with fracked methane from the Dawson Creek area of B.C. Liquified natural gas is a way for fossil fuel companies to reach new markets in an attempt to stay profitable.

Traditionally, to move natural gas from one place to another, you need a pipeline. That means markets can extend as far as a pipeline can be built, giving gas deposits in Canada continental reach. But with climate concerns increasingly rushing to the forefront, fossil fuels like fracked methane do not have a long-term future in a climate-safe world. At the same time, China, South Korea, and other Asian countries that burn significant amounts of coal to generate electricity are looking for ways to reduce emissions and keep the lights on, and see natural gas as a way to do that.

Condensing natural gas by liquifying it essentially allows Canadian gas producers to reach new markets, but the challenge for the companies and their investors is incredibly expensive infrastructure at a time when it’s unclear what the long-term demand will be.

With billions of dollars in loans issued and construction on the pipeline ongoing, there is significant economic pressure to finish building so that when the LNG Canada site is ready, it can immediately get started. That LNG project is estimated to cost at least $40 billion, representing the most expensive private sector investment in Canada’s history — one that Ottawa has encouraged with hundreds of millions of dollars worth of investment.

It’s not just that billions of dollars are on the line that’s driving the economic pressure; it’s the fact that costs are escalating on the pipeline’s build, and TC Energy and LNG Canada’s consortium of owners are feuding over who should pick up the tab.

During a recent call with investors, Coastal GasLink president Tracy Robinson said the company was “100 per cent aligned with LNG Canada” over the importance of finishing construction on a timeline that works for LNG Canada.

“We're committed to making sure that that happens,” she said.

Since that call, TC Energy has committed to spending an additional $3.3 billion to cover cost overruns, but the dispute is not fully resolved.

A recent study from the Institute for Energy Economics and Financial Analysis (IEEFA) found that in the three years since LNG Canada’s owners (Royal Dutch Shell, PETRONAS, PetroChina, Mitsubishi Corporation, and Korea Gas Corporation) decided to build the export terminal, market and policy shifts are threatening its long-term economic viability.

“This project could become a financial albatross for its sponsor investors and it stands as a warning to other natural gas producers in the B.C. Montney,” said IEEFA energy finance analyst Omar Mawji in a statement.

The report explains LNG Canada’s motivation to push through escalating costs to build the export terminal is so its investors have a way to turn a profit on gas deposits in the Montney area they already own.

“To avoid more asset writedowns or a fire sale of their B.C. Montney assets, the equity sponsors of LNG Canada need the project to succeed to sell their gas to a higher-valued market in Asia,” the report says.

In other words, Wet’suwet’en land defenders find themselves on the wrong end of a major global financial network that needs a multibillion-dollar pipeline to feed a multibillion-dollar LNG plant to avoid taking a hit to its bottom line over natural gas assets that are already owned.

This specific financial issue is also unfolding in a broader context of investors pulling out of LNG projects globally. A study from the International Gas Union published in June found a majority of planned projects, a quarter of which are in Canada, are unlikely to be built.

“What's happened is there's been a huge supply response,” said Marc Lee, a senior economist with the Canadian Centre for Policy Alternatives.

Lee explained that about a decade ago, there were many LNG projects planned, with many believing the gas had a “bright future” as a bridge fuel as countries transitioned off coal power. Now “there's a sense that the world markets are oversupplied,” and many companies are in a holding pattern to see if demand catches up to supply.

“Now that's obviously tricky because you need to start constructing several years in advance of actually having a plant that's producing, but then overlaid on all of that is climate change,” he said.

Effectively, that means there’s a shrinking window for when it makes sense to invest in a major LNG plant because the urgency of the climate crisis is only growing. The longer fossil fuel investment decisions are put off, the less stable footing they’re on.

“So if you're on the cusp of making an investment decision, you're probably less likely to do so because climate change is one of the risk factors that you have,” Lee said.

“Low demand on the same amount of supply gets you lower prices, lower prices mean low or little profits, and in some states of the world, you could see this actually losing money when you factor in the upfront capital costs,” he said.

Blocking the construction of a pipeline works to push the cost of building up, working with the logic that a private company eventually can be pushed to a tipping point where it drops a project if it's made unprofitable. It’s proven to be an effective strategy for many pipeline opponents.

A report from Indigenous Climate Action and Oil Change International looked at a series of Indigenous-led fights against more than 20 fossil fuel projects over the past decade that together would spew 1.6 billion tonnes of greenhouse gases into the atmosphere. That’s the equivalent of about 25 per cent of annual emissions from Canada and the U.S., based on 2019 data. About half of those emissions are related to ongoing resistance, including projects like Coastal GasLink and the Trans Mountain expansion project, while the other half would have come from projects that have now been axed, like the Energy East or Northern Gateway pipelines.