The builders of the Kitimat liquid natural gas (LNG) pipeline must feel like Dorothy, Toto and the rest of their pals did in the Wizard of Oz – doing one thing, only to be told they must do something else.

In mid-December, Canada 2020, the liberal-leaning public affairs foundation in Ottawa, held a half-day conference on the LNG pipeline and how the $40- billion venture was the model for infrastructure projects in Canada, mainly because the legal liabilities that stopped the Trans Mountain oil pipeline extension in its tracks have been addressed.

Much attention was given at the conference to the fact that 20 First Nations along the planned route of the Kitimat pipeline had signed on in support of the project, addressing something that is scaring the hell out of Corporate Canada and governments alike – legal duty to consult Indigenous peoples.

Imagine how everyone involved with Kitimat must have felt a few weeks later, when First Nation protestors ignored a court injunction and blocked construction of the pipeline in a very ugly backlash against the project.

Groups around the country piled on, claiming the Kitimat project was another assault on Indigenous people.

Let’s be clear: the elected leaders of the 20 First Nations along the route welcome the pipeline as an economic opportunity and a step toward a healthy Indigenous economy.

But another group of First Nations leaders, the hereditary chiefs, objected to what the elected chiefs had endorsed.

We can thank the 1876 Indian Act and a century of neglect by successive federal governments for this situation. The act states that elected tribal councils are in charge of First Nations bands. Previously, the hereditary chiefs had been in charge. The Indian Act states hereditary chiefs have some power in the interiors lands, but that power is vague and left to people to sort out.

The ambiguity was deliberate, in order to keep the Indigenous population divided and confused while Canada pursued an agenda of residential schools, denying Indigenous people the right to vote (until 1960) and continued dependence on Indian Act agents.

The Kitimat protests come from a loud minority among Indigenous peoples. But the protests are likely to scare potential investors in any infrastructure project, regardless of whether the Kitimat project ends up in court.

How did we get into this mess?

Section 35 of the Constitution says Indigenous peoples should be consulted by governments on major changes that might affect treaty and legal rights. Governments and their agencies haven’t paid much attention.

This section does not give Indigenous peoples a legal veto over resources projects, according to the Supreme Court of Canada (SCC). But, practically speaking, in the current political climate, Sec. 35 provides a de facto veto that can be used to delay a project for years.

Ottawa has lost dozens of court cases over duty to consult. Chief among them was the SCC’s decision that stopped work on the Trans Mountain project last year.

What most Canadians don’t realize is that 43 First Nations had signed on to the Trans Mountain project. But the SCC ruled the project did not meet complicated legal tests verifying that all constitutionally required consultations had been done.

This sounds complicated because it is complicated. Even the SCC is divided on what constitutes “duty to consult.”

Osler Hoskin & Harcourt LLP’s yearend legal review for 2018 states that project proponents and governments must seek to exceed previous standards in recognition that concepts of “good faith” and “meaningful consultation,” among others, may be in flux. “In the meantime,” the review states, “the meaning and content of ‘good consultation’ remains opaque, exacerbated by the decisions of the [SCC and the Federal Court of Appeal].

“The result,” the review adds, “is added uncertainty about investing in Canada, which is one reason, among many, that investor confidence in our resources sector is currently at low ebb.”

If Canada is interested in continued investment in its natural resources, Ottawa and the provinces need to clarify the Constitution, replace the Indian Act and deal with Indigenous peoples and investors in an open-handed manner.