What is the Role of First Nations in Decision-Making on Crown Government Resource Development Projects? – A Hoberg Course Brief

George Hoberg

Chief Roger William celebrating Supreme Court decision (from UBCIC)

January 20, 2015

pdf of this post: Hoberg course brief – aboriginal law

The relationship between Canadian governments and Aboriginal groups has shifted dramatically over the past several decades, but has yet to reach any stable equilibrium that clarifies their relative roles. The core uncertainty is whether Crown governments have the legal authority to proceed with a project if affected First Nations are strongly opposed. This issue received renewed attention when the Canadian Supreme Court issued its Tsilhqot’in Nation v British Columbia decision in June 2014. Much attention has been paid to the emphasis the Supreme Court placed on the need to obtain consent from aboriginal title-holders before proceeding with projects on title land. But as we will see, the shift in the relationship between the government and First Nations on resource project decision-making is not as significant as many have argued.

Structural uncertainty over aboriginal title in British Columbia

First, a bit of background on the continuing challenge to reconcile aboriginal title with Crown or settler title in British Columbia is useful. While treaties were established throughout much of Canada, there are few treaties in BC. The settler governments simply asserted sovereignty over BC, claiming that, prior to European settlement, legally BC was terra nullius or “empty land,” a deeply offensive notion to First Nations who have resided throughout the province, with established system of governance, for many millenia. In response to litigation by First Nations, the Supreme Court began slowly chipping away at this doctrine, first (in the Calder case in 1973) by granting that unless it was formally “extinguished” aboriginal title exists.

However, establishing that a particular First Nation has title to a particular area of the province requires an exhaustive legal process. The current situation throughout much of British Columbia is that aboriginal title has been asserted (in some cases by multiple First Nations over the same land) but not yet legally established in a way that it is recognized by the Crown government.

The breakthrough Tsilhqot’in case

The Tsilhqot’in case was historic because it was the first time courts recognized aboriginal title for BC First Nations. It helped clarify the process for making and considering title claims, and what title means once it has been granted. It also clarified the relation between First Nations and Crown governments on aboriginal title land. The court ruled that “The right to control the land conferred by Aboriginal title means that governments and others seeking to use the land must obtain the consent of the Aboriginal title holders” (paragraph 76). However, in the very next sentence, the court qualified this right to consent:  “If the Aboriginal group does not consent to the use, the government’s only recourse is to establish that the proposed incursion on the land is justified under s. 35 of the Constitution Act, 1982”(paragraph 76).

The justification test for infringing Aboriginal title

The key question then becomes the “justification test.” The Supreme Court articulated the test as follows: “To justify overriding the Aboriginal title-holding group’s wishes on the basis of the broader public good, the government must show: (1) that it discharged its procedural duty to consult and accommodate, (2) that its actions were backed by a compelling and substantial objective; and (3) that the governmental action is consistent with the Crown’s fiduciary obligation to the group” (paragraph 77). Each of these conditions requires further elaboration.

The duty to consult and accommodate exists whether or not title has been established. When the Crown is contemplating actions that it thinks might affect aboriginal title, its obligation to consult the affected First Nation are defined by a spectrum articulated in the Court’s 2004 Haida decision: “In general, the level of consultation and accommodation required is proportionate to the strength of the claim and to the seriousness of the adverse impact the contemplated governmental action would have on the claimed right” (paragraph 79).

Objectives that were considered “compelling and substantial” were articulated in the Supreme Court’s 1997 Delgamuukw case. The Tsilhqot’in case simply quoted the Delgamuukw decision on the definition: “In my opinion, the development of agriculture, forestry, mining, and hydroelectric power, the general economic development of the interior of British Columbia, protection of the environment or endangered species, the building of infrastructure and the settlement of foreign populations to support those aims, are the kinds of objectives that are consistent with this purpose and, in principle, can justify the infringement of [A]boriginal title.  Whether a particular measure or government act can be explained by reference to one of those objectives, however, is ultimately a question of fact that will have to be examined on a case-by-case basis” (paragraph 83).

The third part of the justification test requires the action to be consistent with the government’s “fiduciary duty” to First Nations. This is the most confusing part of the Tsilhqot’in decision. Usually, fiduciary duty requires the fiduciary (in this case the Crown) to ensure the interests of the principal (in this case the First Nations) are being met. In Canadian law, however, fiduciary duty to First Nations means something different. It essentially requires simply that Aboriginal rights need to be balanced with other interests.

The Tsilhqot’in decision did elaborate this requirement is several ways. It held that the duty “infuses an obligation of proportionality” into the process: “Implicit in the Crown’s fiduciary duty to the Aboriginal group is the requirement that the incursion is necessary to achieve the government’s goal (rational connection); that the government go no further than necessary to achieve it (minimal impairment); and that the benefits that may be expected to flow from that goal are not outweighed by adverse effects on the Aboriginal interest (proportionality of impact)” (paragraph 87). In addition, the Court added a specific future-oriented test: “incursions on Aboriginal title cannot be justified if they would substantially deprive future generations of the benefit of the land” (paragraph 86).

A useful way to think about these tests is to imagine how the BC government would try to make them work for Site C, or the federal government for one of the oil sands pipeline proposals. They clearly fall within the allowed objectives, so the only question is whether they meet the other parts of the justification test.

How much does the Tsilhqot’in decision change things?

What impact the Tsilhqot’in decision will ultimately have is uncertain, but legally it changes far less than many assume. In the typical situation where title is asserted but not proven, there is no change from the vague standards articulated in the 2004 Haida and Taku decisions: consult always, accommodate if the claim is strong and the infringement significant, but there’s no veto for the First Nation. What’s new about the Tsilhqot’in decision is that title was finally granted to a particular First Nations over a particular area. But even in that case, it appears that title can be still be infringed with resource projects such as dams or pipelines so long as the Crown goes through the careful justification process. It seems quite clear that legally, First Nations do not have a veto or right to consent, even where title has been legally established.

Wait: Doesn’t the UN give First Nations the right to consent?

First Nations groups frequently refer to the provision in United Nations Declaration on the Rights of Indigenous Peoples that states “States shall consult and cooperate in good faith with the indigenous peoples concerned through their own representative institutions in order to obtain their free and informed consent prior to the approval of any project affecting their lands or territories and other resources, particularly in connection with the development, utilization or exploitation of mineral, water or other resources” (Article 32.1). However, the UN Declaration is not legally binding on signatories. When it finally endorsed the Declaration in November 2010, the Government of Canada took pains to note that it objects to the provision of “free, prior and informed consent when used as a veto.”  In explaining why it would endorse the Declaration if it had these objections, the government stated: “We are now confident that Canada can interpret the principles expressed in the Declaration in a manner that is consistent with our Constitution and legal framework.” That legal framework is the one described above, that does not give First Nations a right to consent.

Hoberg’s Hypothesis: It’s politically impossible for natural resource projects in Canada to proceed if there is significant opposition from directly affected First Nations

The law seems clear that there is no legal right to consent. But there may be an emerging political, or de facto, obligation of Crown governments to obtain the consent, or at least avoid the adamant opposition of, directly affect First Nations. I argue that it may now be the case that, while the law falls short of granting a right to consent to First Nations, it may now be politically impossible for natural resource projects in Canada to proceed if there is significant opposition from directly affected First Nations.

The Prosperity Mine case in British Columbia has been quite revealing. The proposed mine went through both the BC and Federal environmental assessment processes. There were significant environmental concerns with the proposal, and First Nations in the area were resolutely opposed. The BC government considered these objections and approved the project. But the Harper Government, known for its support for resource development, examined the same concerns and rejected the project, citing among other reasons the strong objections of local First Nations to the proposed use of a cherished lake as a tailings pond. The project was redesigned to avoid dumping in the lake and resubmitted, but the local First Nations still opposed the project, and the Harper government again rejected it.

We now have several live cases that will test this hypothesis. Both Site C and the Northern Gateway Pipeline have been authorized for construction by Crown governments despite the explicit, vehement opposition of direct affected First Nations. Whether or not shovels are ever put in the ground for either project will be an important test of the hypothesis.

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Fossil Divestment at UBC: Opportunity for Leadership and Moral Imperative – George Hoberg Remarks to UBC Faculty Association

George Hoberg
October 27, 2014

(A text of the remarks I made at the Faculty Association introducing the motion to call for a referendum on divesting the UBC endowment of fossil fuels. A more detailed rationale with extensive references can be found here)

Good morning everyone and it is so great to see you all here today. I’m especially grateful to see so many of the more than 190 faculty members who signed our open letter.

I’m George Hoberg, a professor in the Faculty of Forestry. I’ve been at UBC now for 27 years, the first 14 in the Department of Political Science, and the remainder in Forestry. My research is on environmental and natural resource policy, including energy and climate policy. Among other things I teach courses on sustainable energy policy to 150 undergraduates and 30 graduate students.

It’s as a result of these three things — my identity as a UBC faculty member, my research into the problem, and especially my teaching – that I’m here today to make a motion that UBC should divest its endowment of fossil fuels.

Last January, our students voted overwhelmingly, almost 4 to 1, to call on the university to divest. It’s time that UBC faculty join that call.

Academic researchers understand all too well that climate change presents an urgent crisis for humanity. The science is clear: the evidence is overwhelming that we are hurtling towards a future that is dangerous for humankind. Immediate actions are required to restructure our energy systems away from fossil fuels and toward clean energy. Luckily, research by engineers and economists also shows that such a transition is both technologically feasible and affordable.

Some are concerned that divestment might reduce the income UBC receives from its endowment, but this need not to be the case. Concern that divesting would hurt the performance of portfolios is not supported by the best available data. Studies designed to measure the impact of divestment have found little or no impact on returns. Indeed, there are increasing concerns, from the likes of the Governor of the Bank of England and major pension funds, that a “carbon bubble” could pose a significant threat to fossil fuel investments.

Just as UBC has undertaken renewal of its facilities and operations as a “living laboratory” for sustainability, we call on our university to apply its expertise and values with the same vigour to its endowment. UBC should devise a profitable fossil-free portfolio that inspires sustainable investing by other institutions.

Others argue that UBC should maintain ownership so that it can exercise leverage as a shareholder. However, because the business model of fossil fuel companies relies fundamentally on exploiting carbon reserves that humanity can’t afford to burn, working through shareholder channels is inadequate to achieve the transformative changes required. These urgent times demand rapid and significant changes in our energy system, and we believe those changes would be better fostered through the more dramatic action of divestment. Moreover, divestment rejects the dissembling tactics of the fossil fuel industry, including efforts to mislead the public about climate science and to delay the adoption of cost-effective policies that draw on social science research.

Given the extraordinary size of the fossil fuel industry and the nature of global capital markets, many argue that the divestment movement is largely symbolic. Divestment by a single investor, acting alone, cannot be expected to make a significant dent in addressing climate change. In fact, the very structure of the climate problem makes it a challenge to demonstrate that any particular action by an individual entity can be effective. The climate crisis is a global “tragedy of the commons,” created by millions of individuals and organizations around the world, all acting in their short term economic interests.  Emission reduction by any individual, or even any country, cannot solve this immense collective action problem. To insist that any individual action or organization must be demonstrably effective accepts a logic that dooms the planet to dangerous climate change. If we continue to be guided by short term economic interests, humanity will simply be incapable of rising to the challenge.

In fact, the symbolism of the demand for divestment is what gives it power and makes it effective. The divestment movement is inspired by the anti-Apartheid movement of the 1980s. The impact of the anti-Apartheid investment campaign was less on the value of shares of companies doing business in South Africa than on how it altered the climate for economic and political relations with the racist South African regime. Fossil fuel divestment can play the same role in providing policy-makers the political space to take decisive actions to address the climate crisis.

There’s a strong scientific and economic justification for divestment, and research shows that divestment is unlikely to affect the financial performance of the endowment’s portfolio. But at the end of the day, the most important rationale for divestment is a moral one. It’s an opportunity to do what we can to address a shared problem with the resources we have at our disposal.  When faced with daunting collective problems like climate change, people are often unwilling to act unless they are sure others are willing to do the same. To that end, divestment is, more than anything else, a signal to each other that we recognize the scope of the problem and we are willing to start taking actions to address it. As part of a rising global movement on divestment, UBC can show leadership by divesting, and inspire others to follow suit.

As teachers, we are reminded of our moral duty to future generations. We interact daily with today’s youth, who will suffer the greatest consequences should we fail to address the climate crisis. We believe that it is inconsistent with UBC’s core values of sustainability, global citizenship, and innovation to support an industry whose products are driving us toward an unsustainable future. And it is disturbing to us that our students’ education, an investment in their future, should be funded in part by profits from an industry that harms that same future. In his installation address, President Gupta said “Each generation has a responsibility to take the world as we find it and do our utmost to make it better.” UBC cannot live up to that promise when it is invested in an industry that poses a direct threat to the well-being of future generations, including our own students.

Divestment is an act of leadership. We are proud of UBC’s commitment to sustainability. We support the overwhelming call by our students for divestment from fossil fuels. The time has come for UBC to take the next step in living up to its ideals.

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LNG for the Win! The October 2014 BC Throne Speech

wordle for BC throne speech October 2014

George Hoberg
October 6, 2014

The Clark government’s Fall Speech from the Throne continues the eggs-in-one-basket pattern established in recent years – the future of BC is premised on the rise of the LNG industry.

The speech is centred around themes of “turning points” and “leadership”. BC’s current turning point is created by the combination of three factors:

  • “For over a generation, the funding commitments of Western governments have exceeded their means.”
  • “the American shale gas revolution has meant the export market south has dried up – and is never coming back”
  • “If we choose to do nothing, to maintain the status quo, we will have chosen decline.”

The choice the BC Liberal government makes, through leadership, is fiscal austerity and the pursuit of new markets in Asia  through LNG: “By choosing to develop the world’s cleanest-burning non-renewable resource, and ship it to the world’s fastest-growing economies, we have chosen growth.”

As someone who follows environmental issues, the relative priority given to resource development over environmental concerns remains noteworthy. We’ll have to see what the regulatory framework for LNG is when announced (presumably later this week). But it is significant that there is no commitment to “world’s cleanest LNG” in the Throne speech, and instead an emphasis on natural gas being the “cleanest-burning non-renewable” – in other words, the cleanest dirty fuel. There remains a quick nod to climate issues, with reducing GHGs in China as part of the rationale, and commitment to regulating so that BC “continues to lead the global fight against climate change.” But no information is provided about how that claim might be made plausible.

Other than a passing reference to multiple categories in the BC Jobs Plan, there is no mention of contributions to the BC economy beyond the resource sector. Given the risks of the LNG strategy, it’s quite shocking that the Clark government seems to be so willing to bet our future on one not-yet-existent industry.

Number of mentions of key areas:

  • LNG/Natural Gas 15
  • First Nation/aboriginal 4
  • Forests/forestry 8
  • Mining 3
  • Climate/pollution/GHGs 3
  • Clean tech (“technology and green economy”) 1
  • Pipelines 0
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It’s D-Day for Harper on Northern Gateway

George Hoberg
June 8, 2014

June 8 - Convergence 2014: Protecting Our Sacred Waters from Tarsands Oil - photo by Ben West

The next big thing in the battle over the Northern Gateway pipeline happens by June 17, when the Harper cabinet’s decision on the National Energy Board’s recommendation to approve the pipeline (with conditions) is due. What’s likely to happen next?

It’s useful to think about the Northern Gateway conflict as involving four stages. We’ve completed the first regulatory stage, where the project has been submitted and undergone regulatory review. We are now in the second stage, on the cusp of a decision by the elected officials with legislative authority over pipeline approval. When that’s done, there are two more stages: the legal stage, and the on-the-ground stage.

The Political Stage

In my view, the odds are still with Harper endorsing the NEB recommendation. He’s invested a great deal politically in getting oil sands access to Pacific markets, and to walk away from the project would be acknowledging a major defeat. But a yes decision is by no means a slam dunk, for several reasons. First, Harper needs to win the next federal election, and public opinion in BC is not favourable to pipeline approval, which puts the 21 Conservative seats at greater risk.

Second, we haven’t heard from Christy Clark and the government of British Columbia on its position on the pipeline in quite some time. If the Clark government remains opposed (its current formal position is that the project does not meet BC’s famous five conditions), it would be very costly politically for the Harper government to approve it.

Finally, there is no evidence that the adamant opposition of First Nations in BC has changed. From the beginning, First Nations opposition has always been the biggest threat to the project. If Enbridge or the government hasn’t been able to turn that around, approving the project will set back relations with First Nations even further, and jeopardize other resource projects important to the Harper government.

Harper’s Choices

Harper essentially has three choices. He can accept the NEB recommendations and conditions. He can reject them, which would kill the project for the time being (Enbridge would be able to propose the project again at a later date). Or he could pull an Obama, and simply put off making a decision about the pipeline.

The National Energy Board Act gives cabinet the authority to accept or reject the recommendation decision of the NEB but cabinet cannot alter the terms and conditions the NEB recommends. The cabinet can, however, ask the NEB to reconsider its terms and conditions, and give it a new deadline. It can actually do so repeatedly. So if Harper wants to simply buy more time, he can do so by asking the NEB to reconsider. (Updated: Or, as was pointed out by James Coleman at the Calgary Law School, he can just extend the deadline indefinitely under Section 54(3).)  Doing so would be a major about face for the Prime Minister who rammed a streamlining of the regulatory review process through Parliament in 2012, and who has been so critical of Obama for failing to bring finality to the Keystone XL decision. But in some ways it would be the most politically graceful move given the painful choices Harper confronts.

What Happens if Next if Harper Says Yes?

The Federal cabinet decision is the most important decision point in this political stage of the Northern Gateway conflict, but it is not the only one. BC’s Premier Clark would still need to weigh in. It would be very difficult for Clark to move to yes on Northern Gateway without a major shift by either Enbridge or the federal government on BC’s demand of a “fair share of the fiscal and economic benefits.” So one thing to look for as part of a yes decision by Harper is whether big new developments occur on sharing economic benefits with BC. Even if that condition gets satisfied, however, Clark will be risking a major political backlash, if she endorses the project, given the political strength of opposition to Northern Gateway in BC. If Clark takes a stand and says no, the pipeline can only proceed if Harper is willing to go to war with BC politically and constitutionally. Given the importance of BC’s 21 seats to the Conservative’s chances for success in the 2015 election, that seems unlikely.

If Harper and Clark both say yes, then look to two other major decision points. The Dogwood Initiative is poised to unleash a citizens initiative to ban tankers from the Pacific coast. While the process is stacked against initiatives, a strong showing of support in the campaign would send shock waves through the electoral process.

And then there’s the proponent, Enbridge. The company has the option of sitting on the license and continuing to work with First Nations to see if it can reduce opposition to the project. If the company chooses to proceed, then we move to the third, legal stage of the conflict.

The Legal Stage

There are already five legal challenges filed against the NEB decision to recommend approval, two by environmentalists, three by First Nations. More are anticipated if the Harper cabinet says yes. It will take a year or more to resolve these cases; this dispute seems destined for the Supreme Court of Canada. The courts could enjoin Enbridge from proceeding before the issues are resolved. If they don’t, Enbridge could still choose to take a pause until they are resolved.

But if Enbridge puts one shovel in the ground in BC to initiate pipeline construction, we’ll enter the fourth, on-the-ground stage of the conflict.

The Looming Civil Conflict

If legal approvals get put in place and Enbridge proceeds, there will be a grand battle on the ground between the company and pipeline opponents. I believe a decision to proceed with the pipeline will result in civil conflict beyond what Canada has experienced in modern times.  I was at yet another rally today in Vancouver against the pipeline where senior First Nations leaders stated that they would use every legal means to stop the pipeline, and if that failed, their people would take “matters into their own hands” to stop the pipeline. If it comes to this on-the-ground stage, the nightly news will be filled with RCMP dragging aboriginal elders off of roads, and continuous physical and legal confrontations between police and opponents. It will make the Clayoquot Sound conflict look like a tea party.

This conflict over a pipeline continues to manifest the struggle over the definition of Canada moving through the 21st century.

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The Site C Panel Report and the Crisis of Credibility for BC Electricity Policy

Courtesy of BC Hydro

George Hoberg
May 9, 2014

Yesterday, the Joint Review Panel for the Site C dam project on the Peace River in northern British Columbia released its environmental assessment report. The panel did not recommend for or against the project, but instead chose to highlight some significant benefits from the project but also that the government has not convincingly made the case that the project is needed in the time frame proposed. As a result, the B.C. government (and the feds) can still choose to proceed with the project but doing so legitimately, given the concerns of the panel, just got much harder.

The panel’s report is striking both in terms of the approach it took and what it implies for the politics and governance of BC electricity policy. In sharp contrast to the Northern Gateway pipeline Joint Review Panel, whose report read more like a rubber stamp of the proponent’s own arguments, the Site C panel took a hard look at BC Hydro’s case for the dam. It challenged a number of the proponent’s findings, and was especially critical of BC Hydro’s justification for the project costs and superiority to alternatives (most notably, conservation and geothermal energy). The summary finding is that “The Panel concludes that the Proponent has not fully demonstrated the need for the project on the timetable set forth” (p. 306). It even had the temerity to recommend that if the governments “are inclined to proceed, they may wish to consider” having the BC Utilities Commission review several aspects of the case for the project.

Does B.C. Electricity Policy Have a Crisis of Credibility?

It seems that every time a major component of B.C. electricity policy is exposed to formal, independent review, it runs into serious problems. The last time B.C. electricity policy got a formal independent review was the BC Utilities Commission review of the BC Hydro 2008 Long Term Acquisition Plan. The BCUC was strongly critical of BC Hydro’s rationale for its plan, and rejected it. The Campbell government responded by stripping the power from BCUC to review major plans and projects, and the Clark government has continued those exemptions. The Clark government has given BC Hydro a rough ride with internal government reviews as well.

The Site C panel report was the first formal independent review since the 2008 shift in governance, and it leaves BC Hydro in quite a pickle. The panel report undercuts the rationale for moving ahead with the major dam, and it is hard to see how the government can move forward with legitimacy without involving the BCUC, something it has already said it refuses to do. BC Energy Minister Bill Bennett quickly dismissed the notion that the government would involve BCUC.

The proposed dam poses a challenging dilemma. As the BC Hydro report makes clear, and the panel report strengthens, the project has concentrated local impacts on an area quite precious to local residents, including First Nations. Yet it would also create a new source of low carbon energy to feed growing demand in the province. It has the added benefit of being able to store electricity to balance intermittent clean energy sources like wind. As a result, it would help foster the transition to a clean energy economy in BC and neighboring jurisdictions.

The challenge is that for the government to proceed legitimately with such a high impact project, there should be, at a minimum, a strong justification for the project’s need. The Site C Joint Review Panel report makes that much harder for the government. And if it chooses not to pursue Site C, the cornerstone of the province’s strategy to meet future electricity needs, BC Hydro needs to go back to the drawing board on its Integrated Resource Plan.

Several Other Notes

As a climate hawk I was dismayed to see the panel, by accepting that LNG compression will be done by burning natural gas, buy into a scenario for future LNG that will quickly blow through BC’s legislative greenhouse gas limits (page 304).

I’m very pleased to see the panel take such a demanding approach to the government’s rationale for the project. That’s why we have environmental assessment requirements. But I was a quite surprised at panel’s conclusions on costs. “The Panel cannot conclude on the likely accuracy of Project cost estimates because it does not have the information, time, or resources. This affects all further calculations of unit costs, revenue requirements, and rates” (p. 280). It’s one thing for a panel to carefully scrutinize a proponent’s analysis and find it inadequate. It seems much less credible, and justified, to conclude a proponent’s analysis is not credible because the panel didn’t have the capacity to scrutinize it. The panel seems content to tell the government it really needs to get the help of BC Utilities Commission.

Finally, environmentalists are fond of pointing out how environmental assessment processes are mere rubber stamps and virtually no projects get rejected. Certainly the Northern Gateway experience feeds into that pattern. But with this Site C panel report, there are now some quite striking cases accumulating of EA panels being strongly critical of projects (see Prosperity Mine for example).

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Canada: The Overachieving Petro-State

George Hoberg

Neil Young during his Honour the Treaties Tour (CTV News)

January 20, 2014

Neil Young’s Honour the Treaties tour has poured gasoline on the already volatile Canadian energy politics.* There are many issues fueling the conflict, but the one I want to address in this blog is whether Canada is starting to act more like a “petro-state.” Thomas Homer-Dixon, writing about the Keystone XL pipeline in the New York Times, argued that “Canada is beginning to exhibit the economic and political characteristics of a petro-state.” Andrew Nikiforuk ramped up the indictment in a Foreign Policy piece entitled “Oh, Canada: How America’s friendly northern neighbor became a rogue, reckless petrostate.” Writing for Maclean’s, Andrew Leach countered that the role of the oil industry in the Canadian economy is not large enough to justify the label.

I agree with Leach that the data on the role of oil in the Canadian economy mean that Canada is in a completely different category from the countries typically referred to as petro-states.** The oil and gas sector make up about 6% of GDP in Canada. According the World Bank, oil rents in Canada make up 3.2% of GDP, ranking Canada 39th in oil dependence.

But I also believe that Canada, under the Harper government, has in fact begun to act more and more like a petro-state. Canada is not, as Leach suggests, a “failed petro-state;” it is an overachieving petro-state.

Evidence of Petro-state Behaviour

In my view, there are four powerful examples of Canadian petro-state behaviour.

  • The most significant example is Canada’s abysmal record on climate policy, and the apparent role of the oil lobby in contributing to the failure to take meaningful action. We used to have a good reputation for leadership in international climate negotiations; now it seems we’re a pariah. Canada has withdrawn from the Kyoto protocol and generally been a negative force in progress towards global agreement. Domestically, Canada has not addressed the growing GHG footprint of its oil sands and is on track to greatly exceed its 2020 targets. It has repeatedly delayed promised regulations for the oil and gas industry, and evidence has emerged that the government has explicitly done so at the request of oil industry lobbyists.
  • Canada has revamped its environmental law framework, at the request of oil industry lobbyists, to smooth the way for the approval of new energy infrastructure like oil sands pipelines.
  • Whether it’s the aggressive “won’t take no for an answer” lobbying of the U.S. on Keystone XL pipeline, or the attacks on the EU’s Fuel Quality Directive, much of our foreign policy seems to be about lobbying for the oil sands industry.
  • Another element of the petro-state idea if that the government gets blinded by oil wealth and doesn’t serve the public interest, or even its own economic interests – what Terry Lynn Karl refers to as “petromania.” There are indications of this syndrome in Canada as well. I believe if Canada were more strategic in implementing an effective framework for environmental governance of the oil sector, it could still have a vibrant energy industry and dramatically improve its environmental record and international image. The argument that Canada (or Alberta, in this case) was not acting strategically with respect to oil sands governance was made by none other than the late Alberta Premier, Peter Lougheed, as far back at 2006 (see also here).

Why is Canada acting more like a petro-state that its economic dependence on oil suggests it should?

The current structure of the Canadian political system gives the oil industry more clout than its share of GDP would suggest.

First, Canada has a very decentralized federation where energy resources are controlled, for the most part, by provincial governments. In Alberta, where the oil sands are, the economic role of the oil sector is much greater, so it comes closer to looking like a petro-state economically. The energy sector makes up 28% of Alberta’s GDP. Energy resource revenues as a percent of Alberta government revenues have ranged from 19% to 40% over the past 10 years, with an average of 29%. Because Canada is so decentralized, Canadian energy policy with respect to the oil sands is mostly Alberta energy policy, and the province’s economic dependence on oil comes closer to a petro-state than the overall Canadian figures would suggest.

Second, Canada’s Prime Minister, Stephen Harper, is from Alberta, and he’s a conservative with a strong ideological affinity with the oil industry. His political views are far to the right of the median voter in Canada, but our party system makes that possible and, in recent years, easy. There are multiple parties on the centre and left, so Harper’s party, which makes up the right end of the spectrum, can dominate federal politics with a parliamentary majority even though it received less than 40% of the popular vote.

As a result, the federal government under Stephen Harper has been highly responsive to the interests of the oil industry. Canada, whose economic structure should not promote petro-state behaviour, has a political structure that has produced an overachieving petro-state.


* In the interests of disclosure, in addition to being a UBC Professor I also am involved in a small climate action group that has taken positions against oil sands pipelines through BC. I also have more Neil Young songs in my Itunes than any other artist, including the Tragically Hip. It is my personal view that Neil Young has probably written more great songs than any artist of my time. It is also my view that he has written some of the worst (e.g., Cripple Creek Ferry).

** The leading academic work on petro-states is Terry Lynn Karl, The Paradox of Plenty (1997). For a more recent treatment, see Michael Ross, The Oil Curse (2012).

Posted in Climate Action Policy, Oil Sands | 1 Comment

Explainer: What Happens After the Northern Gateway Joint Review Panel Reports? (updated with new section on B.C. Government)

George Hoberg
December 17, 2013

After several years of political conflict and two years of public hearings, the Joint Review Panel for Enbridge’s Northern Gateway Project is set to release its report December 19, 2013, at 1:30 PST. The panel will be making recommendations to the cabinet about two things: first, whether or not the pipeline proposal should receive a certificate (a permit), and what “terms and conditions” should be specified for the project. These are actually two separate recommendations that are treated different legally. Examples of terms and conditions could be the requirement for specific spill response plans, or greater research into diluted bitumen behaviour in marine waters. The JRP proposed a set of terms and conditions in April 2013.

From JRP to Cabinet

The JRP was constituted as a panel of the National Energy Board under the National Energy Board Act. When the JRP started its work it had final decision-making authority on approval. But one of the most important changes of the controversial Bill C-38, much of which was designed to facilitate the approval process for large energy infrastructure projects, was the removal the final decision-making authority from the NEB and giving it to cabinet.

The relationship between the JRP recommendation (in this case acting as the NEB) and the cabinet are described in the National Energy Board Act, sections 53 and 54. Essentially, cabinet may accept or reject the recommendation decision of the JRP but can’t alter the terms and conditions it recommends. Cabinet has three choices:

  1. Direct the JRP to approve the application with the terms and conditions recommended by the JRP
  2. Direct the JRP to reject the application
  3. Direct the JRP to reconsider its recommendation or its terms and conditions

Cabinet can ask the JRP to reconsider its terms and conditions, and can do so repeatedly, but it can’t alter them. Cabinet can give specific deadlines by which the JRP needs to reconsider. Cabinet has 180 days to respond.

These provisions create the potential for conflict between the JRP and the cabinet over the terms and conditions. This scenario could arise if the JRP recommends, and then refuses to reconsider, terms and conditions that are so demanding that they make it difficult or unfeasible for Enbridge to proceed. Paragraph 7 of Section 53 states:  “Regardless of what the Board sets out in the reconsideration report, the Board shall also set out in the report all the terms and conditions, that it considers necessary or desirable in the public interest, to which the certificate would be subject if the Governor in Council were to direct the Board to issue the certificate.” It seems unlikely, however, that the JRP would risk an open confrontation with cabinet.

There are five scenarios for how the relationship between the JRP recommendation and cabinet action can be resolved. The percentage numbers given in brackets are my own personal speculation about probabilities of different outcomes.

  1. The JRP recommends approving the application, and cabinet concurs (60%)
  2. The JRP recommends approving the application, and the cabinet orders it to reconsider or reject it (5%)
  3. The JRP recommends rejecting the application, and cabinet concurs (20%)
  4. The JRP recommends rejecting the application, and cabinet orders it to reconsider (10%)
  5. The JRP recommends rejecting the application, and cabinet orders them to approve it anyway (5%). It could either do this by accepting the terms and conditions recommended by the JRP in its December 19 report, or order the JRP to reconsider its terms and conditions.

Options for the B.C. Government

The Government of British Columbia has specified five conditions for the province to support the pipeline. The last formal statement we have from the province on the Northern Gateway Pipeline is it final written submission to the JRP, where it took quite a strong position against the pipeline as proposed. The BC government will have to decide whether the terms and condition proposed by the JRP lead it to change its position. Note that the JRP will not be able to address the province’s fifth condition about getting a “fair share” of economic benefits – that would have to come from subsequent actions by Enbridge or perhaps the federal government.

If Premier Christy Clark chooses to dig in her heels and oppose the pipeline even if recommended by the JRP, her power will be mostly political, not legal. Legally, interprovincial pipelines are quite clearly a matter of federal jurisdiction. In the time of greatest conflict between the BC and Alberta governments about the pipelines, Clark did threaten to deny power from BC Hydro and deny forest permits. But given the formidable legal powers of the federal government in this situation, her leverage is political. B.C.’s most important resource is that Harper’s Tories need B.C. seats to form a government after the 2015 election. 21 B.C. ridings held by Tories, and a minimum of six of them are likely to be marginal ridings for the Tories in 2015.

So the real question is, if Clark determines that after the JRP report her five conditions are not met, and she chooses to dig in her heals and oppose the pipeline, will Harper be willing to provoke a political war with the province of BC? Albertans have long memories about what it’s like when a federal government imposes big energy policy decisions against the express wishes of the province. That might weigh on Harper’s mind, but he’s been awfully committed to getting oil sands greater access to tidewater.

After the Cabinet Decision

If the cabinet rejects the pipeline proposal, it is dead, and Enbridge’s only option is to go back to the beginning of the process.

If the cabinet approves the pipeline, the Enbridge will have the green light from the regulatory process to proceed. It might decide, however, that the terms and conditions are too demanding to justify commencing construction, or Enbridge might choose to postpone construction for political reasons.

If Enbridge chooses to proceed (and possibly even if they don’t), the cabinet decision is virtually certain to be challenged in court by First Nations and environmentalists. It is also conceivable that the Government of British Columbia could launch a legal challenge. When this process began, I said that the biggest obstacle to the construction of the Northern Gateway Pipeline is the adamant opposition of so many First Nations, and that remains the case. The government is required to demonstrate that they have consulted and accommodated the concerns of First Nations. It is plausible that the courts could decide that despite the equity offers by Enbridge and the safety assurances of the company and governments, that the concerns about the risk to First Nations values have not been appropriately accommodated. It could take several additional years for the case to be resolved in court.

If the government’s decision to approve the pipeline application is upheld by the courts, then construction can commence. When it does, it is virtually certain that a widespread campaign of civil disobedience will ensue by a coalition of First Nation and environmentalists

Stay tuned.

Posted in Energy Pipelines | Leave a comment

Why I’m Opposed to the Northern Gateway Pipeline

George Hoberg
November 11, 2013

This Saturday, November 16, I will be joining hundreds of others from the Vancouver area at Science World for the No Enbridge Pipeline rally at 2 PM. It is part of a Canada-wide day of action, Defend our Climate, Defend our Communities. I’m excited that, given the importance of proposals to increase carbon exports to BC’s reputation as a leader on climate action, the Vancouver event is focusing on the Northern Gateway Pipeline.  It’s a critical time: the regulatory review panel charged with recommending whether the pipeline should proceed is required to report by the end of December 2013.

I strongly encourage you to join us, to ensure that our political leaders understand the breadth and depth of opposition to this proposal within British Columbia. Last winter, I appeared before the regulatory review panel to explain why I’m opposed to this pipeline. I’ve reposted my statement below.

Oral Statement to Northern Gateway Joint Review Panel, Vancouver, BC February 1, 2013

Good afternoon. My name is George Hoberg, and I’m here to add my voice to so many other British Columbians who have spoken to you in opposition to Enbridge’s Northern Gateway Pipeline proposal.

I’m a professor in the Faculty of Forestry at UBC. I have a PhD in political science from MIT, and I’ve been on the faculty at UBC for 25 years. My research specialization is environmental and natural resource policy and governance. I teach courses in sustainable energy policy and governance. Parts of my remarks today are from the perspective of a scholar, but I will also be speaking as a teacher and now activist, and finally as a father.

I do want to sincerely thank you for your attention today. I am gratified that you are engaged in such a rigorous process of gathering the facts about the project and listening to the values and perspectives of so many British Columbians. I’m quite sad about the set-up of these hearings; that you felt the need to separate the speakers and panel from the audience. But if it has any benefit, I hope that it allows you to better focus and absorb what you are hearing with an open mind.

As a scholar, one of the things I study is aboriginal resource governance. I know the test for sufficient accommodation, last clearly articulated in the Supreme Court’s 2004 Taku case, is vague. But my reading of the jurisprudence leads me to the conclusion that with such widespread and adamant opposition by First Nations, approving this pipeline proposal would not meet an appropriate test for accommodation. The proponent has offered First Nations substantial economic benefits, and assured them that best practices will be used to minimize the risks of pipeline and tanker spills. First Nations’ opposition west of Prince George remains adamant. In this circumstance, it is hard to see how approving the pipeline can be consistent with accommodating First Nations concerns.

As a scholar I also study environmental policies and procedures including environmental assessment. I strongly believe that the decision, in the terms of reference, to exclude consideration of upstream and downstream greenhouse gas emissions is terribly misguided. The climate impacts of the proposal are not the only environmental risk posed by the pipeline but they are certainly one deserving careful consideration in your process. One needs only to look at the US environmental assessment of the Keystone XL pipeline to see that it is normal and accepted good practice to include upstream and downstream greenhouse gas impacts during regulatory review of oil sands pipeline proposals.

Pipeline or tanker accidents would be a disaster for our rivers and coast. But what worries me more is that even if the oil arrives safely at its destination, it will still contribute significantly to the environmental disaster of dangerous global warming. It is vital to keep in mind what the pipeline is carrying: carbon. The carbon dioxide emissions to the atmosphere from the bitumen carried through the Northern Gateway pipeline will amount to 83 million tonnes per year.  Shockingly, that’s one-quarter more than the 67 million tonnes the entire province of BC emits in a year.

Climate scientists are telling us that we face a planetary emergency. If we stay on our current fossil fuel energy path, there’s a virtual certainty of catastrophic climate change. Our models also tell us it’s not too late to change course, to avoid the worst effects. But it’s getting very late. According to the International Energy Agency, we only have 5 years to begin a fundamental transformation of our energy system.

The urgency communicated by the IEA, an arm of the OECD, has recently been amplified by both the World Bank and the head of the IMF. We’re not talking about Greenpeace here – these are the pillars of the global establishment that are sounding urgent alarms. The problem is these organizations don’t set global climate policy. In fact, no one sets global climate policy

If climate science teaches us that we face a crisis, my scholarship as a political scientist teaches that global warming is an extraordinary political challenge. The complexity and magnitude of the issue seem to overwhelm us, and we find ourselves in a classic case of the “tragedy of the commons”, where each individual – in this case political jurisdictions like provinces and nations – acting in their own self-interest produce an outcome that is disastrous for their collective interests.

Because of these political challenges, policy has demonstrably failed to act in the interests of humanity. In this context, what is the right way to think about large new fossil fuel projects? What I do is perform a thought experiment: if we had in place a policy regime designed to meet greenhouse gas reduction targets necessary to meet the consensus 2 degree target, would this project make sense? That would involve putting in place a price of carbon that was several hundred dollars a ton. In that context, it’s hard to imagine massive new oil sands infrastructure would be justified. Studies from MIT support this conclusion.

Up to now I’ve been speaking as a scholar, but I want to shift now. As a teacher, I found it increasingly challenging to explain these scientific and political realities to students and not come to the realization that I need to do more than research and teach. How could I continue to stand in front of several hundred young adults each year, the generation that will suffer the consequences of climate change, and not become more active politically myself? It is our generation of leadership – it is me, and it you – that has the power to make the changes to put us on a more sustainable path. If we don’t act now, it will be too late for them.

They are my students. They are our children.

In 2011, along with other faculty and students at UBC, I co-founded a group called UBCC350. We are a group of UBC students, faculty, and staff committed to advocating for meaningful government climate action. We strongly support aggressive global and national action to address the climate crisis, but our immediate focus is on carbon exports from British Columbia. BC has enacted some progressive climate policies, but they have yet to be fully implemented. Recent proposals for projects that would massively increase BC’s carbon exports threaten to overwhelm BC’s commitments to reduce greenhouse gases.

I know that all the members of UBCC350 are vehemently opposed to this pipeline. We will continue to work hard, going door to door, ensuring people know about the climate implications of the pipeline, and encourage them to act politically with their children in mind.

Finally, I want to speak to you as a father. I have two children, ages 16 and 18. By the time they graduate from university, we’ll be beyond the window of opportunity the IEA gives for the fundamental restructuring of the energy system.

The tragic fact is that if we are guided by short term economic thinking, humanity will simply not be capable of rising to the challenge of taking the concerted action sufficient to avoid dangerous global warming. That’s the inevitable conclusion of my scholarship.

My conclusion as a father, and as a citizen of British Columbia, Canada, and this extraordinary planet, is that we need to act now because it is the right thing to do. Surely the first human duty is to protect our children from harm.

I’m very concerned about the risks of pipeline and tanker spills, and the need to respect the rights and aspirations of the First Nations on whose traditional territories we have settled. But my greatest concern with this proposal is its contribution to the climate crisis. We need to act swifty and dramatically to change the trajectory of our energy system. If we want to maintain a safe climate for our children and future generations, that’s what the science tells us we need to do. Approving massive new oil sands infrastructure is simply not consistent with that imperative.

I urge you to find that Enbridge’s Northern Gateway Pipeline proposal is not in the national interest.

Thank you for your attention today.

Posted in Climate Action Policy, Energy Pipelines, Oil Sands | 1 Comment

Government of BC to Enbridge: “Trust me” is Not Good Enough

George Hoberg
May 31, 2013

Today the Government of BC submitted its final written argument to the Joint Review Panel reviewing Enbridge’s Northern Gateway Pipeline project to ship oil sands to the Pacific coast at the port of Kitimat in Northern British Columbia. Despite the victory just two weeks ago of a pro-business, pre-resource development party in the BC election, Premier Christy Clark’s government gave a resounded “no” to the project.

You can read the full document here.

Virtually all of the substantial criticism in the 166 paragraph legal submission is about BC concerns with the lack of detailed information about Enbridge plans for pipeline and tanker spills. The most important statement is the document is in paragraph 5:

Paragraph 6 contains the bottom line position: “Given the absence of credible assurance in this regard, the Province cannot support the approval of, or a positive recommendation from the JRP regarding, this project as it was presented to the JRP.”

The core issue really is how much information Enbridge needs to present at this stage about spill preparation. BC summarizes its own view in this paragraph:

Another vital paragraph is the summary position on pipeline risks:

BC essentially repeats the same message in its tanker risk summary:

The final two of BC’s five conditions  got surprisingly little attention. There is only one paragraph on First Nations, emphasizing only that the JRP needs to address First Nations concerns but taking no position:

The question of whether BC will get its “fair share” of benefits, the province’s fifth condition, is not addressed in much detail. The province simply points to some of the shortcomings of Enbridge’s cost-benefit analysis, raising some of the questions brought to the debate by Robyn Allen.

This response by the province is about as strong as one could imagine in the circumstances. But it is very important to keep this statement in context. It is submission to a federal regulatory process, and the JRP merely makes a recommendation to the federal cabinet – Stephen Harper has the final say. Nonetheless, it is very damaging politically to Enbridge’s case for pipeline approval.

Pipeline advocates got a shot of optimism after the NDP was defeated in the election, but this stern rejection from the Clark government is a major blow. It makes it harder for the JRP to recommend approval, and it makes it harder for the Harper government to endorse the pipeline because it would be so toxic to federal-provincial relations.

The prospects for oil sands access to the Asian markets through Kitimat just got a lot dimmer.

Posted in Energy Pipelines, Oil Sands | 2 Comments

What Issues Mattered in the 2013 British Columbia Election? Some Context on the Kinder Morgan Surprise

George Hoberg
May 18, 2013

Everyone’s still trying to make sense of the stunning comeback upset by the BC Liberals. Much attention has been focused on differential turnout and the unwillingness of the NDP to “go negative” in response to the relentless attacks by the Clark campaign. I want to put a word in for issues, because one general pattern in elections is that parties who are favoured on the issues of greatest importance to voters have a strong advantage. An analysis of issue salience and public attitudes towards parties on issues also helps shed light on the impact of the Kinder Morgan surprise that seems to have been an important moment in the campaign.

Ipsos-Reid published the results of a poll of 1400 BC voters on election day. Here’s a table of the list of issues ranked by the percentage of election day poll respondents who said the issue was “very important” in the respondent’s “vote decision.” The table also show how voters who ranked the issue that way voted for the two leading parties, with the final column showing the Liberal advantage over the NDP on that issue.

It is a bit surprising that on three of the five top issues – open and honest government, health care, and trust in the leader or party – the NDP had an advantage. It’s also surprising that Dix ended up with a trust advantage despite the BC Liberals’ relentless attacks on his character and judgment. The problem for the NDP, however, is that the Liberals’ advantage on the economy (ranked second) and the government spending (ranked 5th) were far larger than the NDP advantage on their top 3 issues. Liberals won those concerned about the BC economy by 23 points and those concerned about government spending by 20.

The survey did specifically list “pipeline expansion projects” as an issue in the survey – it was ranked 11th as an issue with 39% of voters saying it was important In their choice. Remarkably, the Liberals had a modest advantage on that issue. Those who listed pipelines as an important issue in their vote seem to have favoured Clark’s “five conditions” policy to Dix’s opposition.

You have to go pretty far down the list to find environment – it is ranked 14th with 36% of voters saying it was important in their voting decision. The NDP had a huge 25 point advantage with those voters.

In my view the issue table provides further support for the argument that Dix’s Kinder Morgan surprise hurt the NDP in the election. While no doubt gaining him some support for those concerned about the environment, it alienated a far larger voting bloc concerned about the economy.

It doesn’t seem like this result was inevitable. If Dix had successfully framed the decision differently – for example by focusing more on “saving our coast” or “standing up for the BC environment” it might have been less disadvantageous. But the Clark campaign was far more effective at winning the framing battle on the issue. One core insight from those who study framing in election is that you want to ensure voters are focused on the issues on which you have an advantage. The Kinder Morgan surprise turned out to be an unexpected gift to the BC Liberal campaign.

Issue Very important Voted for
Liberals NDP Lib – NDP
Open honest gov 71 37 47 -10
The BC Economy 65 56 32 +23
Health care 60 37 49 -12
Trust in leader/party 58 40 45 -5
Gov spending 56 53 33 +20
Leadership 56 48 39 +9
Job creation 44 51 38 +13
Provincial debt 44 56 32 +24
Education 42 32 53 -21
Desire for change 40 7 76 -69
Pipelines 39 45 42 +3
Taxes/HST 38 36 48 -12
Social issues 37 25 59 -34
Environment 36 29 54 -25
Crimes/justice 33 45 48 -3
Candidate in riding 33 42 42 0
LNG 30 54 33 +21
TV Debate 9 55 32 +23
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