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Would Columbus Have Lost His License to Operate?

Columbus Day, or “Día de la Raza” (Day of the Indigenous Races) as it is known in many Latin American countries, has become a controversial holiday in recent years. The current debate over the effects of European colonization six centuries ago can impact business endeavors that affect indigenous people. When pipeline operators are losing their licenses to operate around the world, including in Canada and even in North Dakota, because of difficulties with indigenous people, it is time that the energy industry—and indeed all international corporations—take a long look at their approach to indigenous populations.

In approaching business opportunities that could impact indigenous people, companies need to slow down and spend time building relationships with these impacted people. This work is an essential component of any due diligence effort. I understand the need for speed and that time is money, but a project that loses its operating license after significant startup work suffers far more losses in time and money than the one that takes the time to get it right.

Seeking outside help is always advisable when these issues arise. Most companies lack the necessary resources and knowledge to handle these sensitive issues in-house. Moreover, internal business pressures can cause those in-house people to overlook these issues until it is too late. An outside expert is more likely to identify these issues during due diligence.

After due diligence is completed, a communication plan will need to be developed. A good plan is one that involves true listening to issues and the ability to adjust project plans based on what is heard. Make sure that you have the proper mechanism in place to allow indigenous people to raise concerns long before they lie down in front of your machinery. Whatever remedial mechanism is chosen, it needs to be clearly communicated to the indigenous people in their language. Too often, this process is just a consultation, and then the company moves forward without regard to what the indigenous people said. That leads to issues like those seen in Canada and the U.S. recently, where Canadian First Nations and U.S. tribes have agreed to fight pipeline, tanker, and rail projects.

Similar to Columbus, many companies are good at identifying opportunities and using technical resources to achieve amazing results. However, many are finding the process of building relationships with the indigenous people impacted by their projects to be more than they can handle on their own. There are lessons these corporations can learn from the difficulties Columbus encountered at the end of his journeys. We should strive not to repeat that history.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.