Canada: Legal Options For On-Reserve Resource Development Projects

Last Updated: April 4 2019
Article by Thomas Isaac, Jeremy Barretto and Emily N. Lahaie

Canada's First Nations' reserve lands are located in some of the most resource rich areas of Canada. However, First Nations and their industry partners can encounter difficulties effectively developing these areas, in large part due to the unique legal status of reserve lands and challenges associated with a lack of adequate regulations for resource development on reserve lands.1

Current Challenges to On-reserve Resource Development Projects

A central challenge to developing reserve lands relates to mortgaging interests on reserve land and associated security of investment concerns. For example, while the law regarding the acquisition and enforcement of mortgage interests is relatively clear on non-reserve lands, such issues remain unclear when it applied to reserve lands, resulting in uncertainty.

The Indian Act defines reserves as lands which have been set apart by the Crown for the use and benefit of a First Nation or an Indian Band.2 Ultimately, the Crown holds the title to reserve lands, and these lands are subject to federal administration and come within the exclusive jurisdiction of Parliament, under s 91(24), Constitution Act, 1867.3 First Nations, and in some instances individuals Indians registered under the Indian Act, can hold an interest in reserve land and be granted an allotment therein.

First Nations under the Indian Act can use certificates of possession (the mechanism by which Indians can be allotted reserve land) as collateral if attempting to access secure credit. However, a certificate of possession is not equivalent to a fee simple interest in land and is not considered interests in real property. As such, a lender cannot look to the property of a debtor using a certificate of possession as collateral to obtain payment if the debtor is unable to pay a loan. In such a situation, a creditor has no legal ability to enforce a debt obligation other than beginning an action in the courts. This places businesses located on reserve lands at a disadvantage due to the inability of the businesses to access secured funding.

Another characteristic of Indian reserve land that can be a challenge for resource development is its communal nature. In order for a non-Indian to obtain the right to use or occupy reserve land, an individual or company must enter into a lease or acquire a permit or license for use of the land. Leases, permits, and licences for use of reserve land must be approved by the band council and the Minister, unless the First Nation at issue is one of the exceptions as noted below. These factors can lead to delay and regulatory uncertainty that can discourage investment in large projects and hinder economic development on reserve.

However, as demonstrated below, some on-reserve projects have found solutions to the issues listed above using statutory mechanisms outside of the Indian Act.

1. First Nation Land Management Act Land Codes

The First Nations Land Management Act4 (the FNLMA) is a federal law that allows First Nations to develop their own laws about land use, the environment, and natural resources in order to take advantage of economic development opportunities.

The FNLMA ratifies the Framework Agreement on First Nations Land Management (the Framework Agreement), an agreement negotiated between 14 First Nations and Canada in 1996. As of March 2017, the Framework Agreement has grown exponentially, with over 125 First Nations signed on to it.5

The Framework Agreement is designed to assist the First Nation signatories to opt out of 32 land management sections of the Indian Act and to allow the First Nation signatories to develop their own laws regarding land use on their reserve. Under the FNLMA, land administration is transferred to First Nations once their land codes come into effect. However, oil and gas, fisheries, and migratory birds are not included in the resources to be managed under the Framework Agreement.

Henvey Inlet First Nation (HIFN) is an example of a First Nation that has joined the land management regime under the FNLMA and developed its own land code. HIFN, an Anishinabek community in Ontario comprised of three separate reserve properties, ratified a land code under the Framework Agreement in 2009.6 The HIFN land code gives HIFN control over land administration and interests and licenses on its reserve land. In addition, HIFN's land code grants the band authority to issue Environmental Assessment Permits.

HIFN, through its subsidiary Nigig Power Corporation, entered into a joint venture partnership with Pattern Development, a developer of renewable energy and transmission assets in 2014, to jointly develop, own, and operate the Henvey Inlet Wind Project (the Project), a 300MW wind project and associated transmission line. The Project has obtained an Environmental Assessment Permit from HIFN for the on-reserve portions of the proposed transmission facilities and began construction in 2017.7

2. First Nations Commercial and Industrial Development Act

The First Nations Commercial and Industrial Development Act8 (the FNCIDA) is legislation designed to incorporate provincial legislation as federal law through the construction of regulations that close regulatory gaps on reserves which may exist where an existing provincial regulatory regime, with no federal equivalent, applies to a resource development activity off-reserve but not on-reserve. Regulations under the FNCIDA allow for complex commercial and industrials projects to occur through a tripartite agreement between the federal government, the First Nation, and the province in question. FNCIDA also allows the federal government to delegate monitoring and enforcement of a regulatory regime to the province. The project-specific regulations under the FNCIDA are only made at the request of participating First Nations and are limited to the specific lands described in the project.

An example of FNCIDA regulations are the Muskowekwan First Nation Solution Potash Mining Regulations9 (the Regulations). The Regulations consist of provisions relating to the exploration and development of potash on the Muskowekwan Indian Reserve, which is situated in southeast Saskatchewan approximately 100 kilometers northeast of Regina. The Regulations address the construction, modification, operation, decommissioning, reclamation, and abandonment of a solution potash mine on the Muskowekwan Reserve, specifically with regard to a project with Encanto Potash Corporation. The project area includes 16,831 acres of land that belongs to the Muskowekwan First Nations.

In 2010, Encanto Potash Corporation (Encanto) formed a formal Joint Venture Agreement  with the Muskowekwan First Nations and Muskowekwan Resources Limited Partnership,10 the purpose of which is to progressively develop plans to establish a potash resource on the Muskowekwan First Nations' land. Encanto agreed to construct and operate the project. MRL will receive shares as well as royalty payments upon production, while the Muskowekwan First Nations will receive milestone payments. Encanto is currently exploring partnerships to advance the financing and development of the Muskowekwan project.

3. On-reserve Projects Using the Provincial Regulatory Regime

Depending on the needs of the project proponent and First Nation, some on-reserve resource development have proceeded under the existing provincial regulatory regime. An example of such a project is the Chiniki First Nation Solar Project (the Solar Project), an on-reserve solar electricity project located in Alberta that is using the Alberta Utilities Commission (the AUC) process to apply for project licensing and permitting that applies to off-reserve projects.11

The owner of the Solar Project is the Chiniki Trico Limited Partnership (the Partnership), which is a partnership between the Chiniki First Nation and the Trico Group. The Partnership will own, develop, and operate the Solar Project. The Solar Project is proposed to be located on approximately 54.5 hectare of First Nation Reserve land near the town of Morley, Alberta.

The Solar Project is currently in the AUC review process. In a May 9, 2018 information request letter, the AUC asked the Partnership to clarify any federal approvals the Solar Project may need and specifically address if "..the lands upon which the project is to be sited have been designated for development under the Indian Act and the Indian Referendum Regulations."12  In the event the lands are not, the Partnership was asked to "...describe the status of this approval and explain when Chiniki expects to receive land designation." The Partnership responded to the AUC on May 28, 2018 stating that "[i]n regards to federal approvals, [the Partnership is] unaware of any specific approvals required by the Project at this time based on [its] discussions with [its] advisors and the corresponding federal entities." The Partnership further stated that the land that the Solar Project is sited to be on requires a properly approved Band Council Resolution in order for the Solar Project to proceed, per consultation with the Chiniki First Nation and subject to third party financing requirements.13 The final federal requirements for the Solar Project will be of interest to renewable energy developers.

Implications for Resource Developers

The above projects demonstrate that there are unique challenges and solutions in relation to the development of resource projects on reserve. In many resource–rich areas, reserve lands may be an untapped opportunity for project development in partnership with First Nations. The legal tools used depend on the needs of the project, First Nation, and proponent.

A land code under the FNLMA grants a First Nation broad powers over their reserve lands in perpetuity. However, these powers cannot apply to resources such as oil and gas and fisheries. In addition, the FNLMA land code process can take many years to put in place and is driven entirely by the First Nation. FNCIDA regulations provide the most robust regime for resource development, given that regulations on and off reserve would be consistent. In our experience FNCIDA regulations take years to develop and require significant collaboration between Federal and Provincial governments and the First Nation. Finally, proponents and First Nations may attempt to obtain approvals by applying under provincial laws applicable to off-reserve projects. The Solar Project demonstrates that provincial regulators will seek clarification from the proponent  regarding applicable federal requirements.

In summary, on-reserve resource development presents an opportunity for First Nations and proponents to unlock untapped resources. While there may be important legal considerations for doing business on-reserve, these impediments can typically be addressed with innovative and practical legal solutions resulting in greater certainty for all parties involved: First Nations, government regulators and investors.

Footnotes

1 Government of Canada, "First Nations Commercial and Industrial Development Act" (March 29, 2012), online: Indigenous and Northern Affairs Canada https://www.aadnc-aandc.gc.ca/eng/1100100033561/1100100033562

2 Indian Act, RSC 1985, c I-5 at s. 2(1).

3 Constitution Act, 1867, (UK) 30 & 31, c 3.

4 First Nations Land Management Act SC 1999, c. 24

5 The First Nations Lands Advisory Board, "Framework Agreement" online: https://labrc.com/faqs/framework-agreement-faq/

6 Henvey Inlet First Nation, "Land Code" (September 9, 2009) online: henveyinletwind http://s98611120.onlinehome.us/hifn2011/wp-content/uploads/2011/08/FINAL-LAND-CODE-hifn-land-code-sept-9-09-sa-rev.pdf

7 Henvey Inlet First Nation, "Partnership" online: henveyinletwind https://henveyinletwind.com/partnership/

8 First Nations Commercial and Industrial Development Act SC 2005, c 53.

9 Muskowekwan First Nation Solution Potash Mining Regulations SOR/2017-47.

10 Encanto Potash Corp "Technical Report Summarizing the Preliminary Feasibility Study for the Muskowekwan First nations Home Reserve Project in South Eastern Saskatchewan, Canada" (February, 28, 2013) online: encantopotash http://www.encantopotash.com/Repository/Home/technical-summary-feb-2013.pdf

11 Chiniki Trico Limited Partnership, "AUC Rule 007 Facility Application for the Chiniki Nation Solar Project (March 13, 2018).

12 Alberta Utilities Commission, "Letter regarding Chiniki Nation Solar Project Response to Information Request Date May 9, 2018" (May 28, 2018).

13 Alberta Utilities Commission, "Letter to Chiniki Trico Limited Partnership"

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Thomas Isaac
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions