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The feds cut Trans Mountain a $1.8M tax break in the ’50s for a pipeline. A First Nation got just $2,400. It’s still fighting for redress

December 13, 2023

First Peoples Law Report: Global News – The Chief of a First Nation in British Columbia is angry and frustrated at pipeline giant Trans Mountain and the federal government, saying both have failed to fairly compensate his community for all the crude oil that’s been pumped beneath their land since the 1950s.

And he’s not letting go.

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Seven decades ago, court records indicate that the Coldwater Indian Band near Merritt, B.C., signed an agreement with the Government of Canada and with Trans Mountain, the company that built the original pipeline and is now twinning that line.

The First Nation received a one-time payment of $1,292 for the 1950s-era line. This payment was “consideration for the easement” representing a 60-foot right-of-way for the pipeline over Coldwater’s lands, according to the records.

The agreement was called “an indenture,” a legal term that refers to an agreement between two parties.

Coldwater also was paid an additional $1,125.09 for loss and damages associated with the original pipeline’s construction over its territory, plus ongoing payments in the form of property taxes, which all communities impacted by the pipeline receive.

Other communities, including non-Indigenous ones, were also compensated at the time according to the same formula used to calculate Coldwater’s compensation agreements. The difference is, Coldwater decided to do something about it.

In an interview with Global News, Coldwater Indian Band Chief Lee Spahan described the small amount of the payments decades ago as “a slap in the face to all our past leadership and our ancestors.”

And a judge agreed.

In a 2017 Federal Court of Appeal ruling, Justice Eleanor R. Dawson ruled that the federal government and its Minister of Indian Affairs at the time did not have the Coldwater First Nation’s best interests at heart when that indenture agreement was first signed all those years ago.

Now declassified cabinet documents obtained by Global News show that while Trans Mountain gave Coldwater the nominal sum for using the land, the company also quietly lobbied the Liberal federal cabinet for a remission, or refund, of import duties it paid on steel pipe bought for the project.

The cabinet documents show Ottawa gave Trans Mountain a big tax break; though some opposed it, ministers approved a $1.8 million refund on import duties, according to the documents, kept by Library and Archives Canada.

Coldwater doc
Declassified cabinet documents from the 1950s show how the Minister of National Revenue, despite the objection of some members, green-lit a $1.8 million tax break (1950s dollars) to Trans Mountain.

Spahan’s community, in contrast, got 0.13 per cent of that for the easement over their lands. The Chief says the historical suppression of Indigenous interests in Canada continues to this day — and his fight for fair compensation is just another example of that.

Making Amends

To move forward and reconcile for past lapses, Spahan believes the federal government and the pipeline giant should make the wrong right. Trans Mountain is now government-owned, making it easier to get the job done — at least in theory.

The trouble is, Spahan says he is getting nothing but bureaucratic stalling and runaround. “It’s very frustrating — because you look at how much money they are making off the pipeline, yet they still choose not to deal with Coldwater,” he says.

The Coldwater First Nation’s pipeline dealings, and long fight for fair compensation, represent a complex and difficult case that raises important public governance issues. The dispute also casts a long shadow on upbeat boasts made by Trans Mountain about the various economic benefits its crude oil line has brought and will bring to First Nations communities in Western Canada.

There are 129 First Nations communities along the 1,147-kilometre pipeline route.
There are 129 First Nations communities along the 1,147-kilometre pipeline route.

“Along the pipeline corridor, the Trans Mountain Expansion Project continues to create employment and economic opportunities for Indigenous, local, and regional workers,” the company states in a news release. “We also create training and legacy benefits for Indigenous Peoples from small and large communities.”

Others disagree.

“The reality also is that First Nations communities do not receive the same trickle-down benefits or any type of direct royalties from these industries,” says Eriel Tchekwie Deranger, the executive director of Indigenous Climate Action, an Indigenous-led environmental group. “The only way that we get any benefits are through closed, proprietary negotiated agreements with these industries that read like gag orders — or through business arrangements,” Deranger added.

A Trans Mountain spokesperson says that “the nature and scope of our negotiated, commercial agreements with Indigenous groups (as rights-owners) are unique and different from agreements entered into with local governments. The confidentiality around our agreements is also requested by the groups, and therefore we respect that.”

(Chief Spahan told Global News that it was Trans Mountain that requested confidentiality from Coldwater, not the other way around).

What remains unresolved, he says, is fair compensation for the original pipeline that Trans Mountain built through the heart of the territory 60 years ago — a pipeline that, he says, is still “in trespass.”

In 2017 — the same year that Canada celebrated its 150th birthday with a pledge to pursue reconciliation with Indigenous Peoples — Justice Dawson agreed the 1950s “indenture” deal was not fair to Coldwater First Nation or its members.

She found that the Minister of Indian Affairs (as the office was known then), which was responsible for overseeing the deal, did not have the Band’s best interests at heart when the right-of-way deal was signed for $1,292.

“I would return the matter to the responsible Minister for redetermination,” Justice Dawson ruled.

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The minister is now Patty Hajdu, who currently leads what is now called Indigenous Services Canada. Her Liberal government has owned Trans Mountain since 2018.

Asked to explain why no new agreement has been reached six years after the Federal Court ruling, Indigenous Services Canada, as the department is now called, would offer only an emailed reply.

The department stated: “Indigenous Services Canada is aware of Coldwater Indian Band’s concerns and is working closely with Coldwater Indian Band and Trans Mountain Corporation to fully understand the community’s ongoing interests. The Department cannot comment further as discussions are ongoing on this issue.”

Global News pressed the department for further details and clarification but did not receive a response.

Meantime, Spahan told Global News that he has yet to hear from Ottawa or Trans Mountain. Government-owned Trans Mountain, for its part, says resolving the dispute with the First Nation is not its problem. “The historical indenture is a matter between the Government of Canada and Coldwater,” the company stated in an email.

‘Historical Indenture’ 

Despite Prime Minister Justin Trudeau saying that reconciliation with Indigenous Peoples is his number one priority as leader, Spahan says Coldwater’s quest for justice is getting little traction in the nation’s capital — despite promises by the prime minister to try harder to seek reconciliation with First Nations.

“No relationship is more important to Canada than the relationship with Indigenous Peoples,” the prime minister said in 2017 on National Aboriginal Day, as it was then called. “Our Government is working together with Indigenous Peoples to build a nation-to-nation, Inuit-Crown, government-to-government relationship — one based on respect, partnership, and recognition of rights.”

“Minister Hajdu and the prime minister — it’s like they’re ignoring Coldwater,” Spahan says. “But yet, they get on the media and talk about all this reconciliation with First Nations. But when it comes to Coldwater, they just totally ignore us.”

In fact, Coldwater hasn’t been totally ignored.

Spahan says Coldwater and Trans Mountain have signed a new, separate deal to compensate the Coldwater Indian Band for the construction of the expanded Trans Mountain pipeline on its territory, which will triple the current capacity to carry oil from Edmonton to an ocean port in Burnaby, B.C., where it can be shipped to markets in Asia.

It’s impossible to know how much Coldwater got under this new agreement.

Spahan is adamant that this round of compensation only covers the current expansion, and should not be conflated with compensation for the first pipeline. About the new compensation, Spahan said: “It has nothing to do with the existing [1950s-era] pipeline. We made that clear to them.”

Trans Mountain won’t say how much it paid Coldwater, and the Chief says he, too, is strictly forbidden from sharing details under confidentiality clauses built into a so-called mutual-benefit agreement signed with Trans Mountain.

Other First Nations whose territory is impacted by Trans Mountain are also forbidden from speaking. Global News spoke with at least three other Chiefs, along with representatives from various Nations along the pipeline route. None could disclose details about their mutual-benefit agreements with Trans Mountain, saying they were strictly beholden to confidentiality.

Big Payouts

But mutual or community benefit agreement information is not under such heavy lock and key in other non-Indigenous communities covered by freedom of information laws. Global News used a freedom of information request to obtain the “Memorandum of Understanding” signed between the City of Coquitlam, near Vancouver, and Trans Mountain.

City documents reveal the pipeline company cut a cheque for $769,300 on June 10, 2021, along with several smaller cheques for just over $2,000 each (totalling $8,050) for rights-of-way through various tracts of city land that the pipeline passes through.

Freedom of Information documents show that Trans Mountain paid the City of Coquitlam $769,300.000 for access to three tracts of land in the city in 2021.
Freedom of information documents show that Trans Mountain paid the City of Coquitlam $769,300 for access to three tracts of land in the city in 2021.
The City was also paid several smaller cheques valued each at around $2K, totalling $8,050.
The City was also paid several smaller cheques, valued each at around $2K, totalling $8,050.

The documents also reveal compensation values per acre for the affected tracts. Two rights of way were evaluated at $2,478,000 per acre. Another was worth $504,000 per acre. The company also appears to have paid compensation to the City for allowing contractors’ crews to set up workspace areas while working on the line.

Gorana Cabral, Coquitlam’s director of finance, said, “The city has received approximately $12 [million] from Trans Mountain to address immediate disruptions from construction, including necessary repaving, as well as ongoing and long-term impacts and associated costs due to the existence of the (new) pipe.”

In the District of Hope further to the east, Trans Mountain issued two press releases to announce its funding commitments.

One promoted a $1.6-million cash injection for road upgrades; another highlighted a $500,000 transfer as part of a “community benefit agreement” with the district.

Former Mayor of the District of Hope, Peter Robb, is photographed next to community liaison Leah Caldow in 2022. Trans Mountain provided a $500,000 payment as part of a "community benefit agreement" for the construction of a multi-use pathway project.
Former mayor of the District of Hope, Peter Robb, is photographed next to community liaison Leah Caldow in 2022. Trans Mountain provided a $500,000 payment as part of a ‘community benefit agreement’ for the construction of a multi-use pathway project.

The current mayor of Hope, Victor Smith, said this summer the pipeline was a boon to the community.

Elsewhere, in the Fraser Valley, the pipeline giant signed several confidential agreements with landowners and farmers for the right to build the new pipeline through their lands.

Tom Baumann, an Abbotsford-area farmer who negotiated deals with Trans Mountain for a group of farmers in his area, says that the total compensation — calculated based on the size of land and presumed value of crops — was worth “hundreds of millions of dollars.”

Property Taxes

Under its “indenture agreement,” Trans Mountain and its subsidiaries have also paid hundreds of thousands of dollars in the equivalent of ongoing property taxes to Coldwater over the years.

Clause 1 of the indenture requires TMP to pay Coldwater FN “all charges, taxes, rates and assessments charged on lands encumbered by the easement.” That covers the use of Indigenous land for any buildings or other linear assets (pipeline facilities) within Coldwater. The company does the same with other First Nations and where it operates within cities.

Between 2010 and 2014, Coldwater received $481,890 from Trans Mountain, court records show.

Other municipalities also receive property taxes from Trans Mountain, exponentially more, in fact, than Coldwater.

Cabral, the City of Coquitlam’s director of finance, indicated that Trans Mountain paid approximately $425,000 in 2023 in property taxes.

In Abbotsford, that sum was considerably higher: $2,631,668 in 2023.

Property taxes levied by the City of Abbotsford to Trans Mountain
Property taxes levied by the City of Abbotsford to Trans Mountain.

Chief Spahan says he is not going to give up the fight for a fair piece of the pie.

He says he invited Trans Mountain’s CEO, Dawn Farrell, to visit the community. He’s also invited the prime minister to visit and make amends. “I’ve invited him, and delivered letters to him in the past, inviting him to Coldwater,” Spahan says. “And I have to wait six months for one of his ministers to respond to that invitation? Totally unacceptable.”

Spahan suspects that Coldwater’s reticence to approve the new line “really frustrated [Trudeau].”

But that should not deflect from the fact a historical wrong needs to be fixed, he says. “They need to deal with Coldwater … and deal with the concerns and the issues that we have with Canada.”

By Kamyar Razavi Global News