The Canadian government is confronting a significant challenge to its goal of doubling non-U.S. exports due to a dispute at the Port of Prince Rupert in British Columbia. This issue has escalated into seven lawsuits involving the Lax Kw’alaams and Metlakatla First Nations, collectively known as the Coast Tsimshian. They allege that the Crown misled them regarding developments on their traditional lands.

The conflict centers on a proposed propane export facility at the port, which has implications for other resource projects. The two First Nations have also filed lawsuits against the Ksi Lisims LNG project, a key initiative announced by the prime minister last week. The ongoing dispute could hinder plans for an oil pipeline from Alberta to the port.

A source familiar with the situation described the propane dispute as “a root poisoning the whole tree,” emphasizing the First Nations' belief that their rights have been violated. The Metlakatla's statement of claim filed with the B.C. Supreme Court highlights that the port was established in 1914 on land that was once part of their reserve. In 2019, the Canadian government obtained consent from the Metlakatla for the divestiture of Ridley Terminals, a facility handling coal. The Coast Tsimshian were offered a 10 percent equity stake in the terminal but were not informed about an exclusivity agreement with Dutch company Royal Vopak for the storage and loading of propane.

The First Nations claim they only learned of this exclusivity deal in November 2023, when Trigon, the successor to Ridley Terminals, sought permission to expand its operations to include propane. The Port Authority denied this request due to the existing agreement with Vopak. The Metlakatla argue that the Canadian government failed to adequately consult them, breaching its fiduciary duty.

No defense has been filed in response to the lawsuits, and the Port Authority has refrained from commenting on ongoing legal matters. The Department of Transport maintains that the port operates independently, directing inquiries to the port authority. Legal experts suggest that courts may not be sympathetic to the port authority, given the apparent lack of consultation.

After two years of inaction, the situation gained attention in August when First Nations leaders met with a deputy clerk of the Privy Council in Ottawa. Sources indicate that the leaders are frustrated by the lack of progress on their concerns. B.C. Premier David Eby has reportedly urged the federal government to address the crisis at Prince Rupert promptly, given its economic significance.

Recently, Royal Vopak and its partner, AltaGas, confirmed the economic viability of their propane export project at Prince Rupert, with plans to begin operations in mid-2027. This $1.35 billion terminal is expected to generate substantial annual earnings. Trigon also plans to build a $750 million facility, claiming strong demand for Canadian propane in Asia.

Despite the potential for increased exports, the ongoing disputes have created obstacles. The Metlakatla chief expressed a desire to partner with Canada to strengthen the economy, but emphasized that they cannot consent to projects that violate their rights. The chief noted that the government must address the exclusivity deal to resolve the lawsuits.

There are indications of possible movement in negotiations, as discussions have reportedly taken place between government officials and the First Nations. However, the political landscape remains uncertain, with key figures in the government occupied with other responsibilities. The situation has been further complicated by the decision of Canadian fertilizer giant Nutrien to build a new export terminal in Washington state instead of Vancouver or Prince Rupert, reflecting concerns about investing in Canada’s West Coast amid ongoing disputes.