Introduction

Definitions

Friquently Asked Questions:

1. Reserve Land Tenure 
2. Reserve Land Transaction 
3. Registration of Reserve Land Transactions 
4. Legal Capacities of First Nations 
5. Band Council Resolutions and Access to Reserve 
6. Bylaws 
7. Funding Arrangements 
8. Indian Moneys 
9. Claim Settlements 

Resources

Acknowledgment

Doing business on Indian reserve land is a challenge for lenders. The land-holding regime, restrictions on access, the taking of security, the administrative regimes of bands – with their different structures, powers and financing arrangements – all contribute to create a complex situation where standard mainstream lending practices are not applicable. Despite these limitations, however, financial institutions have been increasingly active in First Nation communities. 

When Aboriginal leaders, financial institutions representatives, and government officials met for a roundtable discussion in November 1997, clarification of the regulatory environment was identified as an important priority to provide lenders with the certainty needed to increase their activities on Indian reserve land. A working group formed to follow-up on the roundtable included a subgroup tasked with the clarification of the regulatory environment, and the identification of ways to increase business within that regulatory framework. 

This document was prepared by members of the working group as a guide for borrowers, lenders, Aboriginal organizations and government officials in the form of definitions of key concepts and answers to frequently asked questions. This document will be updated as needed to reflect changes in policy and/or legislation. 

The information in this document is not a comprehensive overview of the legal and administrative aspects of lending on Indian reserve land, nor does it constitute or provide a legal interpretation of the applicable sections of the Indian Act by DIAND or the participating financial institutions. The objective is to facilitate an understanding of the regulatory environment and thus help First Nations access loan capital. Readers and users are advised to seek legal advice from qualified counsel before entering into any of the transactions reviewed or discussed herein. 

Revised May 1, 1999 
 

All statutory references are to the Indian Act, R.S.C., 1985, c. I-5, as amended, unless otherwise stated. 

This document is not intended to, nor does it, provide its readers and users with legal advice. Readers and users are advised to seek legal advice from qualified counsel before entering into any of the transactions reviewed or discussed herein. 

Absolute Surrender

Allotment

Appropriated Funds

Funds appropriated for First Nation programs and services are distinct from “Indian Moneys” and are thus not governed by the “Indian Moneys” sections of the Indian Act.

Band/First Nation

Note: The term “band” and the official band name should be used in any formal documentation to ensure legal certainty – financial institutions should refer to the Band Name System (see Resources) for the correct name of a particular First Nation. 

Band Council/First Nation Council

Note: The term “Council of the Band” and the official band name should be used in any formal documentation to ensure legal certainty – financial institutions should refer to the Band Name System (see Resources) for the correct name of a particular First Nation. 

Band Council Resolution (BCR)

Band List

Band Member/First Nation Member

Bylaw

Certificate of Occupation

Certificate of Possession

Consolidated Revenue Fund (CRF)

Custom Allotment/Custom Holding

Designated Land

Designation by way of a surrender that is not absolute (commonly referred to simply as a “designation”)

First Nations Gazette

Funding Authority

Funding Arrangement

Indian Lands Registry (ILR)

Indian Moneys

Indian Oil and Gas Canada

Indian Taxation Advisory Board (ITAB)

Lawful Possession

Locatee

Locatee Lease

Location Ticket

Public Moneys

Reserve Land

Surrendered Land

Temporary Possession

Tribal Councils

This document is not intended to, nor does it, provide its readers and users with legal advice. Readers and users are advised to seek legal advice from qualified counsel before entering into any of the transactions reviewed or discussed herein. 

Frequently Asked Questions (May 1999) ISBN 0-662-27881-X 
 

I. RESERVE LAND TENURE

Refer to the DIAND (Department of Indian Affairs and Northern Development) Land Management Manual for further information on applicable policies and processes. (see Resources) 

Reserve Land

1. What is a reserve, and who holds legal title to reserve land?

Generally, a reserve is a tract of land, legal title to which is held by the federal Crown, which has been set apart by the Crown for the use and benefit of a specific First Nation. (For the status of reserves in Quebec, consult legal counsel). (s.s.2(1); see definition of “reserve land”) 

2. How is a reserve created?

 While reserves are defined under the Indian Act, there are no statutory provisions for creating or enlarging a reserve. Reserve status is normally granted by the Governor in Council through the exercise of the Crown’s Royal Prerogative, and is generally documented by a federal order in council. The process is governed by DIAND’s Additions to Reserves Policy (which covers both the creation of new reserves and the expansion of existing ones). 

3. What happens to existing interests on land which subsequently attains reserve status?

Prior to granting reserve status, the government’s policy is to ensure that all third-party interests (such as leases, mortgages, easements, etc.) are resolved. 

4. Who is legally responsible for managing reserve land?

DIAND administers and controls reserves, and manages reserve land for the benefit of First Nations. (Constitution Act, 1867, s.s.91(24)), Constitution Act 1930, Indian Act, s.3, s.s.18(1))

 The Minister or the Governor in Council may delegate authority to a First Nation to manage designated land and manage reserve land which has not been designated. Where this occurs, the First Nation can approve allotments and other transactions, and sign leases and other agreements on the Minister’s behalf. (Specific powers are stipulated in the instruments setting out the delegations of authority.) (s.s.53(1) and s.60; contact regional offices for a list of First Nations with delegated authority). 

Self-government

5. How does self-government affect the management of reserve land?

 Under self-government agreements and accompanying federal legislation, First Nations may obtain the right to manage their land without DIAND’s involvement. Agreements may address only land management, or include broader powers related to self-governance. Agreements/legislation should be reviewed individually for provisions relating to land regimes, capacity, etc. (The Sechelt and Cree Naskapi First Nations are currently under self-government regimes.) 

First Nations Land Management Act

6. How does the proposed First Nations Land Management Act affect the management of reserve lands?

 First Nations who choose to opt into the proposed First Nations Land Management Act (FNLMA) will be legally responsible for managing their land in accordance with the agreement and legislation, as opposed to the Indian Act. Each First Nation who signs the Framework Agreement must then pass a land code, setting out specific provisions and processes for dealing with interests in land. Land codes must be approved by the First Nation membership. 

While the FNLMA does not permit the use of reserve land as collateral, it does provide First Nations with a mechanism to clear up some of the uncertainties under the Indian Act. Example: A First Nation’s land code can provide greater certainty as to the mortgageability of leasehold interests in individually held land. As of September 1998, the FNLMA has not yet passed, although DIAND hopes to introduce the legislation as soon as possible. 

7. Which First Nations have signed the Framework Agreement?

The following fourteen First Nations have signed the Framework Agreement (as of September 98):
 
 

Westbank (BC)  Musqueam (BC)  Lheidli T’enneh, also known as Lheit-lit’en and Fort George (BC)  N’Quatqua (Anderson Lake, BC)  Squamish(BC)  Siksika Nation(AB)  Muskoday (John Smith)(SK)*  Cowessess (SK)

Opaskwayak Cree, also known as The Pas(MN)  Nippissing, also known as Nipissing Band of Ojibways(ON)  Mississaugas of Scugog, also known as Scugog(ON)*  Chippewas of Mnjikaning, also known as Chippewas of Rama(ON)  Chippewas of Georgina Island(ON)*  Saint Mary’s (NB)

* Indicates First Nations who have already passed land codes. It is not known when the remaining eleven First Nations will enact land codes. 

Individual Interests in Reserve Land

8. Can an individual member of a First Nation obtain a real property interest in that First Nation’s reserve land?

Individual First Nation members can acquire rights to use and occupy reserve land under the provisions of the Indian Act. A First Nation council must first allot a parcel of land to a member by way of a Band Council Resolution (BCR). The BCR will outline a request for the issuance of a Certificate of Possession (C.P.). Once the request is approved by the Minister, the individual has lawful possession under the Indian Act and will be issued a C.P. as evidence of title by the Indian Lands Registry, which will register the transaction. When an individual has lawful possession, the right to use and benefit from the land shifts from the First Nation community to the individual. It is the closest thing to outright ownership of reserve land that an individual Indian can have under the Indian Act. (s.s.20(1)) 

The BCR allotting the land must be submitted by the First Nation to DIAND for ministerial approval. It must refer to the relevant statutory provision, as well as the legal name and First Nation (Band) number of the person to whom the land is being allotted. Where the First Nation controls its membership (membership is administered by the First Nation and not by DIAND), a certificate attesting to membership must be provided. A land description and the signatures of a quorum of councillors must also be included.

 Before seeking ministerial approval, DIAND will search its membership records (if it controls the First Nation’s membership) and the Indian Lands Registry (ILR) (including the Indian status of the individual receiving the allotment). The status of the land is also checked to determine if there are any outstanding leases, surrenders, etc., which would come into conflict with the allotment. Following approval, the allotment is submitted for registration in the ILR and the individual receives a Certificate of Possession as proof of interest. (s.s.20(2)) 

If the request is not approved, the Minister may grant temporary possession and the individual would receive a Certificate of Occupation, which is valid for up to four years. The individual normally has to satisfy conditions attached to the temporary possession before the expiry date, at which time the Minister may approve the original allotment. Example: The individual must build a house within a year. (s.20(4),(5),(6); see II. Reserve Land Transactions, III. Registration of Reserve Land Transactions; see also Indian Lands Registration Manual, as updated from time to time)

9. What is a custom allotment/custom holding?

A First Nation council may, by way of a resolution, grant an individual the right to use and possess a parcel of reserve land according to its own custom. These are sometimes referred to as “custom allotments” or “custom holdings.” The Indian Lands Registry does not accept these transactions (including any subsequent transfers) for registration, as they are outside the Indian Act and are not legal interests under the Act. (see definitions of “lawful possession,” “custom allotment/custom holding;” see also II. Reserve Land Transactions, III. Registration of Reserve Land Transactions). 

10. Are joint tenancies or tenancies in common possible under the Indian Act?

Although not addressed by the Indian Act, the practice has been that lawful possession may be held jointly or in common. The province of Quebec is the exception with respect to joint tenancies, since the Quebec Civil Code does not recognize the concept. 

11. Can individual members of a First Nation transfer their lawful possession?

Yes, although such transfers are restricted to either the First Nation or another member of the First Nation, and must be approved by the Minister in order to be legally valid. Once approved by the Minister, the transfer is registered in the Indian Lands Registry (ILR). 

Before seeking ministerial approval, DIAND ensures that a form entitled “Transfer of Land in an Indian Reserve” has been completed; it contains pertinent information such as proper legal names, First Nation (Band) numbers of the parties, a proper land description, acknowledgment of consideration passing between the parties, etc. 

DIAND will search its membership records (if it controls the First Nation’s membership) and the ILR (including the Indian status of the individual receiving the transfer). The status of the land will also be checked to determine if there are any outstanding interests (e.g., mortgages) which would need to be discharged. Once approved by the Minister, the transfer is submitted for registration in the ILR and the individual receives the transferred Certificate of Possession as proof of interest. (s.s.20(2)) 

Transfers internal to the First Nation can also take place without ministerial approval; they would neither be recorded nor could they be searched in the ILR (it should be noted that some First Nations have their own land registries which are unrelated to the Indian Lands Registry and are not authoritative). Such transfers do not legally transfer the individual’s interest under the Indian Act. (s.24; see III. Registration of Reserve Land Transactions; see also Indian Lands Registration Manual, as updated from time to time)

12. Can an individual transfer his or her temporary possession?

No – temporary possession cannot be legally transferred under the Indian Act.

13. What happens to an individual’s lawful possession in the event of a marital dispute and/or dissolution?

 Nothing changes with respect to title to the lawful possession. Provincial laws dealing with the division and occupation of the matrimonial home do not apply to reserve land, and there is no mechanism to effect a court-ordered partition of the interests. 

If the lawful possession is jointly held (as noted, this legal concept is not recognized in Quebec), joint tenancy continues unless the parties agree to enter into a co-tenancy arrangement. Each individual’s share of the interest can be transferred to the First Nation, or to other members of that First Nation. 

As a practical matter, how the issue is treated depends on the circumstances of a particular First Nation. In some cases, a First Nation council will allow a non-Indian spouse to continue to reside on the reserve and to occupy the matrimonial home (normally this is covered by a First Nation’s housing policy). This does not constitute lawful possession and will not show up on a registry search. (see III. Registration of Reserve Land Transactions) 

14. What happens to an individual’s lawful possession when that individual dies?

A person can transfer lawful possession under a will to surviving heirs. If there is more than one heir, they can inherit as joint tenants or tenants in common (the exception is Quebec, where joint tenancy is not recognized under provincial property law). Where there is no will, the interest will be transferred under the rules of intestacy. Both transfers under wills and intestacies must be approved by the Minister in order to be legally valid, and would then be recorded in the Indian Lands Registry. Transfers which are not approved by the Minister and which are not registered are not legally valid. 

If held jointly by the deceased and other(s), the interest will pass automatically to the surviving joint tenant(s). If held in common with others, the interest will devolve according to either a will or under the rules of intestacy, subject to the Minister’s approval. (s.42-s.50; see III. Registration of Reserve Land Transactions) 

For more information, refer to DIAND’s Estates Procedures Manual (see Resources). 

15. Can an individual bequeath lawful possession (under a will) to a person who is not a member of the First Nation for whom the reserve was created?

 When the heir is a person not entitled to reside on the reserve, the interest must be either sold to the First Nation of which the deceased was a member or to another member of that First Nation, with compensation going to the non-member heir. The same rules apply on an intestacy (where there is no will). (s.42-s.50; see III. Registration of Reserve Land Transactions) 

16. Can a Certificate of Possession/Occupation or Location Ticket be cancelled?

 Once granted, a Certificate of Possession, a Certificate of Occupation or a Location Ticket can only be cancelled in extremely limited circumstances. The Minister may cancel a Certificate of Possession/Occupation or a Location Ticket issued to or in the name of a wrong party. Any of these documents can also be cancelled and new ones issued to correct clerical or other similar mistakes, such as incorrect factual descriptions. The Minister may also cancel a Certificate of Possession, etc., with the holder’s consent; no consent is required in the event of fraud or error. (s.26, s.27) 

17. Can individual members of a First Nation take out a mortgage on their lawful possession, or use their personal property (located on reserve) as security to obtain financing from non-Indians?

 Neither the real nor personal property of individuals or a First Nation can be mortgaged, or subject to attachment, execution, seizure, etc., except where this is in favour of the First Nation or another member of the First Nation (see exceptions noted below). Since lawful possession is a form of real property interest, it is subject to this restriction. (s.s.89(1); see III. Registration of Reserve Land Transactions) 

18. What are the exceptions to subsection 89(1) which prohibits mortgage or seizure of property?

 A leasehold interest in designated land may be mortgaged, seized and subject to execution upon default of the terms of a mortgage agreement. (s.s. 89(1.1) see definition of “designated land”) Conditional sales contracts where the seller retains ownership until final payment is made are allowed, and the seller’s rights under the agreement may be exercised. (Seizure of personal property sold under this type of contract is not prohibited by legislation.) (s.s.89(2)) 

19. Can individuals use their lawful possession to obtain financing from other Indians?

 A security interest may be granted in individually held land if the lender is either the First Nation or an individual member of the First Nation. (s.s.89(1)) 

20. Can individual First Nation members lease their land to third parties?

 Subsection 28(1) of the Indian Act provides that an agreement whereby a First Nation or an individual member of that First Nation grants rights to third parties (persons not belonging to that First Nation) to use, occupy, reside on – or otherwise exercise any rights on – a reserve is void (not legally valid and enforceable).

 However, persons having lawful possession (locatees) may apply to the Minister to lease the land on their behalf. The lease can be granted to another First Nation member or to any other third party. DIAND will then lease the land and the locatee is entitled to the rental revenues. A locatee may enter into a leasing arrangement without ministerial approval/execution, but this arrangement will not be legally binding or enforceable. Note: Where the term of the lease is more than 49 years, DIAND’s policy requires a vote of the First Nation membership. (s.s.58(3), s.s. 28(1); see also questions 13-18) 

21. Can a lessee of locatee land obtain a leasehold mortgage?

 Lenders who wish to provide this type of mortgage should obtain legal advice before proceeding. Subsection 89(1) applies to Indian lessees of locatee land. 

22. Can an individual’s lawful possession be expropriated?

 There are a number of ways that this can be done: reserve lands which are taken or transferred under s.35 of the Indian Act for use by provincial or municipal governments (or other entities with powers of expropriation) may include locatee land; locatee land can also be set aside for use by the First Nation community, for purposes such as burial grounds, community centres, etc. (s.35; s.s18(2)). 
 

II. RESERVE LAND TRANSACTIONS

Refer to the DIAND (Department of Indian Affairs and Northern Development) Land Management Manual for further information on applicable policies and processes. (see Resources) 

Permits

1. What is a permit?

A permit is a limited right to use and occupy reserve land granted to non-Indian third parties. Permits grant a limited interest in land, can be canceled at will (although not arbitrarily) and are generally assignable upon ministerial consent. Exclusive interests are normally granted through leasing mechanisms under the Act. (s.s.28(2), s.s.58(4)) 

2. How are permits issued?

 Subsection 28(1) of the Indian Act provides that an agreement whereby a First Nation or an individual member of that First Nation grants to third parties (persons not belonging to that First Nation) rights to use, occupy, reside on – or otherwise exercise any rights on – a reserve is void (not legally valid and enforceable). The Minister therefore issues permits upon the request of a First Nation council by a Band Council Resolution. The Crown is the permitter and the party receiving the permit is the permittee. Like lease revenues, permit revenues accrue to the benefit of the First Nation. (s.s.28(2), s.s.58(4)) 

3. What types of permits are there?

 A number of different types of permits authorizing the use of reserve land are allowed under the Indian Act (e.g., utility permits, agricultural or grazing permits and the removal of timber and sand and gravel.) (s.s.28(2), s.s.58(4); see Indian Timber Regulations; Indian Mining Regulations passed under the Indian Act; see also DIAND’s Forestry Manual and Minerals Manual, as listed in Resources)

 Memoranda of Understanding and letter permits are permits issued to other government departments which need to use reserve land (e.g. the Solicitor General for an RCMP outpost, Environment Canada for an environmental monitoring station). (General authority, Indian Act) 

Leasing/Sales of Reserve Land

4. Who is the legal lessor of reserve land?

 Since the federal Crown has legal title to reserve land, the Minister, as the Crown’s representative, is the legal lessor/landlord. However, all leasing revenues accrue to the benefit of the First Nation, or individual member, as the case may be. 

5. How does a First Nation lease reserve land to third parties?

 The i>Indian Act provides that an agreement whereby a First Nation or individual member of that First Nation grants third parties (persons not belonging to that First Nation) rights to use, occupy, reside on – or otherwise exercise any rights on – a reserve is void (not legally valid and enforceable). (s.s.28(1))

 However, there are a number of mechanisms under the Indian Act whereby First Nations can request that reserve land be leased on their behalf. The most common way is for a First Nation to designate its land to the Crown for the purpose of leasing. The Minister will, following the designation, lease the land according to the terms set out in the designation. Specific leases and development plans may be attached to the designation, or the designation can be general, stating the land can be leased for commercial, residential, recreational or industrial purposes. In the case of a general designation, a specific lease proposal would be proposed and approved at a later date. Designations are registered in the Indian Lands Registry (Designated and Surrendered Lands Register). (s.37- 41, s.s.53(1); see III. Registration of Reserve Land Transactions) 

Leases of oil and gas resources within reserve boundaries may also be authorized. These rights are granted under the Indian Oil and Gas Act, and regulations passed under this Act. Before oil and gas leases can be issued, the First Nation’s interest must be designated to the Crown under the designation provisions of the Indian Act.

 The Indian Oil and Gas Act is administered by Indian Oil and Gas Canada. (for names/contacts, see Resources) 

6. Can a leasehold mortgage be granted in land which has been designated?

 Yes, a leasehold mortgage is possible for designated land. (s.s.89(1.1); see definition of “designated land;” see also III. Registration of Reserve Land Transactions) 

7. Can a leasehold interest in designated land be assigned?

 A leasehold or other interest (e.g., easement) in designated land can be assigned to any person if the lease or other grant provides for this option, subject to ministerial approval. Conditional assignments are prohibited and are not accepted for registration. (s.54, s.s.55(2)) 

8. Aside from designations, are there other ways a First Nation can lease reserve land?

 The Minister may grant agricultural or grazing leases of uncultivated, unused land without a designation upon request of the First Nation by a Band Council Resolution (BCR). As well, individual members of a First Nation who have lawful possession may apply to DIAND asking that the Minister lease their land on their behalf. (s.s.58(1),(3)) 

9. Can a First Nation sell its land?

 Lands are more commonly exchanged than sold. In accordance with sections 37-41 of the Indian Act, lands can be exchanged after they are absolutely surrendered to the Crown for the purpose of exchange. The Crown will then dispose of the land on the First Nation’s behalf, according to the terms of the surrender. Although sales of reserve land are extremely rare, the Crown can sell reserve land on behalf of a First Nation. Absolute Surrenders are registered in the Indian Lands Registry (in the Designated and Surrendered Lands Register). (s.37 - s.41; see definitions of “surrendered land,” “absolute surrender;” see also III. Registration of Reserve Land Transactions) 

Process for Designating/Surrendering Land

10. How is land designated or absolutely surrendered?

 The process for surrendering or designating land is the same under the Indian Act. It is complex, requiring informed consent procedures (including a First Nation membership vote), various documentation requirements and ultimate acceptance by the Governor in Council in order to be legally valid. (s.37 - s.41; see definitions of “designated land,” “surrendered land”) 

11. Can designations and surrenders be revoked?

 There are no Indian Act provisions for the revocation of designations. However, designations are revocable, depending on whether or not the land is subject to any third-party interests (e.g., leases granted under the designation). The revocation process, such as a request stemming from a full First Nation vote or a Band Council Resolution (BCR), depends on the whether or not revocation was allowed under the terms of the designation. In all cases, the revocation must be accepted by the Governor in Council. 

Revocations of absolute surrenders are not possible, since the land has lost reserve status. However, land which was surrendered for sale, but which remains unsold, can regain reserve status if a proposal is approved under DIAND’s Additions to Reserves policy. 

III. REGISTRATION OF RESERVE LAND TRANSACTIONS

1. Why was the Indian Lands Registry (ILR) created?

 The ILR was established pursuant to the Indian Act, which directed that DIAND establish a Reserve Land Register, and a Surrendered and Designated Lands Register. (s.21,s.s.55(1)) 

2. What is the ILR Reserve Land Register and what information does it contain?

 Transactions affecting reserve land, such as lawful possession and Certificates of Possession, Certificates of Occupation (see Definitions), etc., are recorded in the register. A search will indicate, for example, the following:
 
 

• who has lawful or temporary possession of a particular parcel of reserve land; 
• whether the land is subject to a joint tenancy (possible anywhere except in Quebec); 
• the history of ownership and transfers of lawful possession (including transfers to heirs under a will or intestacy); 
• whether there are any leasehold interests; 
• whether the parcel is encumbered by any interest other than s.35; 
• whether there are any permits issued over any part of the reserve; 
• whether part of the reserve has been set aside for a community purpose under s.s.18(2) of the Act; 
• whether part of the reserve is subject to any interests granted under s.35 of the Act. 

 Transactions affecting surrendered or designated land (see Definitions) are recorded in the register. A search will indicate, for example, the following:
 
 

• the parcels of reserve land which have been surrendered and designated; 
• all sales and leases of surrendered and designated land, mortgages and assignments of leasehold interests in designated land; 
• certificates of lis pendens (pending litigation); 
• any revocations of designations. 

 The only authorized registry is the ILR. While a First Nation may operate its own registry for information purposes, the registry would not be authoritative. 

5. Are all individually held lands registered in the ILR?

 All lawful possession interests and Certificates of Possession evidencing these interests are registered in the ILR. However, some First Nations issue custom allotments/custom holdings for lands, without submitting them to DIAND for ministerial approval or registration. Custom allotments and any unregistered, unapproved transfers of lawful possession would not show up on a search of the ILR, and neither would be recognized as validly conferring lawful possession under the Indian Act. (see definitions of “custom allotments,” “lawful possession,” “Certificate of Possession;” see also I. Reserve Land Tenure)

Accessibility of the ILR to the Public

6. Where is the ILR?

 The ILR is located at 10 Wellington Street, 17th Floor, Hull, Quebec, K1A 0H4. 

7. Who can search for information in the ILR?

 Any member of the public can search either the Reserve Land Register, or the Surrendered and Designated Lands Register. Inquiries can be directed to: 

Registrar of Indian Lands:	Tel.: (819)994-2990, or
Deputy Registrar of Indian Lands:	Tel.: (819) 997-8123
	Fax: (819) 997-6882

Copies of the Indian Lands Registration Manual, as updated from time to time, and related documents such as the ILR Application Form, Registration Checklist etc., are available from the ILR. (see Resources) 

8. Can registry information be obtained from outside the ILR?

 All DIAND regional and district offices and several First Nations have direct, online access to the Indian Lands Registry System (ILRS), a computerized database which enables users to track all transactions registered in the ILR. It should be noted that the ILRS is only a tracking system; registration can only be done by submitting all required documents to the ILR by mail or in person. (see Resources)

 The following is a list of regions and districts on-line (September 1998):

Atlantic:	Pat Collins – Regional Office, Amherst, NS
	Tel.: (902) 661-6246
Quebec:	Marie Claude Leclerc – Regional Office, Quebec, QC
	Tel.: (418) 648-7748.21
Ontario:	Don Stead – Regional Office, Toronto, ON
	Tel.: (416) 954-3224
	Ken Brosseau – Southern District Office, Brantford, ON
	Tel.: (519) 751-2061
	Gail Restoule – Sudbury District Office, Sudbury, ON
	Tel.: (705) 522-5100
	Angie Albers – Western District Office, Thunder Bay, ON
	Tel.: (807) 623-3534
Manitoba:	Peter Garrett – Regional Office, Winnipeg, MB
	Tel.: (204) 983-3188
Saskatchewan:	Myrna Mitrov – Regional Office, Regina, SK
	Tel.: (306) 780-7243
Alberta:	Dayle Callihoo Campbell – Regional Office, Edmonton, AB
	Tel.: (403) 495-6534
British Columbia:	Kelly Cochrane – Regional Office, Vancouver, BC
	Tel.: (604) 666-7421

The following is a list of First Nations online (September 1998):
 
 

Ontario Mohawks of Akwesasne  Chippewas of the Thames First Nation  Six Nations of the Grand River  Sagamok Anishnawbek  Batchewana First Nation  Chippewas of Georgina Island  Wikwemikong  Garden River First Nation  West Bay  Nipissing First Nation  Whitefish River  Alderville First Nation  Golden Lake  Walpole Island  Whitefish Lake  Michipicoten  Dokis  Saugeen  Ontario (Con’t) Mohawks of the Bay of Quinte  Chippewas of Mnjikaning First Nation  Beausoleil  Chippewas of Kettle and Stony Point  Chippewas of Sarnia  Hiawatha First Nation Saskatchewan  Muskoday First Nation  Sakimay  Red Pheasant  White Bear  Saskatchewan Indian Institute of Technology  British Columbia Kamloops  Westbank First Nation  The BC Regional Office and the ILR are working on a plan to connect over 40 First Nations in the coming fiscal year.

Quebec Kitigan Zibi Anishinabeg  Odanak  Abénakis de Wolinak  Nation Huronne Wendat  Kanesatake  Kahnawake  Timiskaming  Micmacs of Gesgapegiag  Listuguj Mi’gmaq First Nation Council  Montagnais du Lac St-Jean  Manitoba Buffalo Point First Nation  Opaskwayak Cree Nation  Long Plain  Tootinaowaziibeeng Treaty Reserve  Keeseekoowenin  Alberta Alexander  Bigstone Cree Nation  Blood  Dene Tha’  Enoch Cree Nation  Peigan Nation  Saddle Lake  Siksika Nation  Sturgeon Lake  Tsuu T’lna Nation  Woodland Cree First Nation  Horse Lake First Nation  Lesser Slave Lake Indian Regional Council  Atlantic The Atlantic Regional Office and the ILR are working to connect several First Nations in the coming fiscal year.

Registration in the ILR

9. What is the process for registering a transaction in the ILR?

 The process is as follows: the First Nation submits a completed transaction to the region or district for registration; in turn, the region or district forwards the paperwork to the ILR with a standard application to register. When a First Nation has delegated authority under s.s.53(1) or s.60, the First Nation will forward transactions directly to the ILR. 

10. What are the requirements of the ILR for registering a transaction?

 A transaction must be submitted to the ILR for registration in accordance with the ILR’s policy and procedures. The ILR will review the application to register in accordance with a Registration Checklist to ensure the accompanying documents meet all statutory, policy and ILR requirements, including proper identification of parties, the necessary originals, approvals, any required certifications, affidavits, proper signatures, etc. In the normal course of business (barring any major transactions which create an unusual volume of paperwork), the application is reviewed and is either registered or returned with stated reasons for refusal to the sender within 48 hours of being received. All registered transactions which are assigned a registration number, and the date and time of registration are recorded. (see Indian Lands Registration Manual, as updated from time to time, and related documents such as the Registration Checklist) 

11. What can delay the registration of a transaction?

 As noted in question 10, the volume of transactions can slow down the registration of a particular transaction in the ILR. More commonly, delays can occur at the First Nation, regional or district level. Canada Lands Surveys are normally required and are time-consuming. (Even a less official Regional Surveyor’s plan can take up to five months to complete from the time it is requested.) Transactions which are submitted with incomplete documentation are rejected and must be re-submitted. To expedite registration, the ILR will accept transactions by fax for pre-approval (send fax to the attention of the Deputy Registrar at (819) 997-6882). 

12. What are the most common reasons for the ILR to refuse an application to register?

 This normally happens when documents are incomplete, or information is incorrect or missing: Example: Survey requirements are not met, required approvals are missing, or uncertified copies are submitted instead of originals. 

13. Does the ILR guarantee registered transactions are valid?

 The ILR reviews incoming transactions for registrability (i.e., the ILR’s registration requirements have been met, such as the right number of certified copies/originals, affidavits, approvals, signatures etc.). The ILR does not, however, guarantee that transactions are legally valid. 

14. Will the ILR refuse to transfer an interest in reserve land if there is a mortgage registered on title?

 When lawful possession or leasehold interests are subject to a mortgage, a transfer of these interests will only be registered if the purchaser assumes the mortgage, the mortgage is discharged or the ILR receives an undertaking (usually from a lawyer) that the mortgage will be discharged once the transaction is complete.

 Note: due to subsection 89(1), mortgages of lawful possession would not be valid where the mortgagee is neither a First Nation nor an individual First Nation member; similarly, leasehold mortgages in individually held land made in favour of financial institutions would not be valid where the leasehold interest is held by an Indian. (see II. Reserve Land Transactions) 

15. Does the ILR accept caveats for registration on title?

 The ILR no longer registers caveats on title. Notices have replaced caveats and operate as follows: A Notice, like a caveat previously, can be placed on title as a Notice of Claim. The party placing the Notice must also provide the ILR with a “Depositor’s Affidavit of Service,” a document verifying that the person holding the interest has been notified that the Notice has been placed on title. Unlike a caveat, a Notice does not entitle the depositor to be notified when a subsequent transaction affecting the same parcel of land is submitted for registration and such registration will occur without delay. The person against whose interest the Notice has been placed can register a “Response to Notice” and a Notice can be withdrawn at any time by registering a “Withdrawal of Notice.” Unlike a caveat, a Notice expires automatically after one year and a new one must be submitted. 

16. Is the information contained in the ILR accurate?

 As noted in question 8, the information is inputted/outputted on the ILRS, which is a reliable system. However, the ILRS, like any other database, is only as reliable as the data received, and problems can and do arise when transactions (such as custom allotments, transfers of custom allotments, transfers of lawful possession and Certificates of Possession, transfers under wills or intestacies, spousal occupation of a marital home, leases, mortgages and assignments) occur without DIAND’s approval and are not registered. In such cases, a search of the ILR would not indicate the current status of these interests. (Note: the legal status remains unchanged if ministerial approval is required and has not been obtained.) 

17. Why doesn’t the ILR have a priorities system for dealing with competing interests in reserve land?

 The ILR’s mandate under the Indian Act does not provide for sorting out priorities among competing interests. Exceptions are assignments of interests in surrendered and designated land which are subject to ministerial approval. (s.54) Provincial jurisdictions have passed fairly complicated and sophisticated legislation dealing with this area of law. New federal legislation would be required to properly implement a reserve land priorities system. 

18. How does the proposed First Nations Land Management Act (FNLMA) affect the registration of transactions for First Nations under the FNLMA regime?

 There are no changes – the same policies and procedures apply. 

IV. LEGAL CAPACITIES OF FIRST NATIONS

First Nations and First Nation Councils

 1. What is the legal status of a First Nation?

 Although there is no statutory provision addressing this question, the courts have found that First Nations, as represented by their First Nation councils, are legally capable of being sued and of suing on their own behalf. A First Nation council will normally be a party to a court action as the representative of the First Nation and its members. 

2. Can a First Nation council enter into a legally binding financial agreement on behalf of the First Nation?

 While this area of law is somewhat unclear, a First Nation can be legally bound to uphold its obligations under a financial or other agreement if a contract is approved or its execution is authorized, by a duly passed resolution of the First Nation council.. Each transaction should be reviewed in advance by the financial institution’s legal counsel. (s.s.2(3)(b); see definition of “Band Council Resolution (BCR)”) 

3. Can A First Nation council contract on its own behalf and be legally bound under the contract?

 A First Nation council can contract in its own name, and have legally enforceable rights and obligations under that contract. Readers should seek the opinion of legal counsel with respect to individual transactions. 

First Nation-owned Corporations

4. What is the legal status of a corporation which is wholly owned by First Nation members?

 A corporation which is wholly owned by a First Nation and its members may enter into contracts and be legally bound on the same basis as any other corporation. The same requirements and corporate law principles apply (e.g. non-exhaustive: liability of the corporation as a separate legal entity, as opposed to personal liability of the directors; directors’ liability for unpaid taxes under the federal Income Tax Act, and for wages under provincial employment standards legislation, etc.; directors’ authority under common law – indoor management rule, etc.).

 The current status of a First Nation-owned corporation can be checked in the same way as any other corporation’s status would be checked – a search of the relevant provincial or federal corporate registry will indicate whether the company has duly incorporated, and whether the corporation is in good standing. While not addressed by the Indian Act, the courts have ruled that this type of corporation is not Indian for the purposes of taxation and other corporate obligations. Only in special circumstances will the courts “lift the corporate veil” and deem the status of shareholders to affect the status of a company.

 Notwithstanding the separate legal status of a First Nation-owned company, many financial institutions request BCRs from the First Nation authorizing the company to borrow money, postpone the First Nation’s interest in the company in favour of the financial institution or for loan guarantees. 

5. Do First Nation-owned corporations incorporate under federal or provincial law?

 They can incorporate at the federal or provincial level. 

Self-governing First Nations

6. What is the status and contractual capacity of a self-governing First Nation?

 Individual self-government agreements set out the status, rights and obligations of a self-governing First Nation, and should be reviewed with respect to each First Nation. 

Tribal councils

7. What is the legal status of a tribal council?

 While DIAND requires incorporation for funding purposes, not all tribal councils are incorporated. The current status of a tribal council can be checked in the same way as any other corporation’s status would be checked – a search of the relevant provincial or federal corporate registry will indicate whether the tribal council has incorporated and whether it is in good standing. Where a tribal council has not incorporated, its legal standing should be verified by legal counsel. 

8. Do tribal councils incorporate under federal or provincial law?

 Tribal councils can incorporate at the federal or provincial level. 

9. Can a tribal council be legally bound under a contract?

 A tribal council which has incorporated may enter into contracts and be legally bound on the same basis as any other corporation. The same requirements and principles of corporate law apply. Where a tribal council has not incorporated, its ability to enter into binding contracts should be verified by legal counsel. 

V. BAND COUNCIL RESOLUTIONS AND ACCESS TO RESERVE

Band Council Resolutions

1. What is a Band Council Resolution (BCR)?

 Although BCRs are not defined anywhere in the Indian Act, they are referred to in the Indian Band Council Procedure Regulations and are required to initiate, authorize or approve numerous transactions under the Act; they are a First Nation’s means of providing instructions, approvals, etc., to DIAND (Department of Indian Affairs and Northern Development). They may, for reference purposes, be defined as a record of a First Nation council decision made by a majority of the councillors of a First Nation at a meeting of the council duly convened. (s.s.2(3); see Indian Band Council Procedure Regulations ) 

2. Is there a central BCR registry?

 Unlike the Indian Lands Registry for reserve land and land-related transactions, there is no public registry which records all BCRs and can be searched. However, it may be possible to request copies of BCRs from First Nations themselves. Where a BCR is required to request, approve or authorize a particular transaction such as an allotment or permit, it will be recorded as part of the transaction in the Indian Lands Registry and is thus publicly available. 

3. Why don’t BCRs have a standard format?

 As noted above, although BCRs are required for certain purposes under the Act, the Act does not require standardization. BCRs have therefore evolved over time as a convention. While there are some common elements, BCRs are internal to each First Nation, and differ according to tradition or the wishes of a current Chief and Council. 

4. Can BCRs be standardized?

 The Indian Act does not require the standardization of BCRs. However, DIAND requires the BCR to contain specific elements and/or wording for some transactions (e.g., allotments, s.35 transfers, etc.). 

5. Can a financial institution or other third party rely on a stand-alone BCR as a legally binding and enforceable document?

 A stand-alone BCR is not a legally binding contractual document, although BCRs are required for a First Nation council to exercise its decision-making powers under the Indian Act. As noted above, since BCRs simply record decisions, they may be superseded or revoked by subsequent BCRs. This is based on principles of administrative law – one First Nation council cannot bind a subsequent council in the exercise of a statutory power. (s.2(3)). 

6. How is a BCR used in the contracting process?

 A BCR is an essential part of a contract with a First Nation. A First Nation council must first approve and/or authorize the execution of an agreement by way of a BCR in order for a third party to be able to rely on such agreement as being legally binding and enforceable. (s.s.3(2)(b); see IV. Legal Capacities of First Nations) As a practical matter, financial institutions rely on BCRs as evidence of an agreement and First Nations themselves tend to view undertakings based on BCRs as evidence of serious commitments. 

Access to Reserve Land 

7. Do laws of trespass apply to reserve lands?

 As with land which is not reserve, the issue of trespass only arises where the entry onto a reserve is challenged. The Indian Act provides that the Crown may, on behalf of a First Nation or an individual member of that First Nation, bring an action in trespass against non-Indians entering reserve land without the proper authority. However, since the Indian Act does not define the term “trespass,” common law principles apply. This means that a financial institution must have the permission of a First Nation (or member of that First Nation in the case of lawful possession) to enter a reserve. Permission would also likely be required from an Indian who has a “custom allotment/custom holding” (as opposed to lawful possession). 

Entry to a reserve for lawful purposes such as serving a subpoena, seizing goods under a conditional sales contract or seizing a valid leasehold mortgage in designated land would not legally constitute acts of trespass. It should be noted that individuals cannot legally refuse to grant access to land which has not been allotted to them. Such access can only be denied by the First Nation council. However, individuals who have lawful possession of reserve land (or who hold custom allotments) can oppose entry onto their property. (s.30, s.31, s.s.89(1.1), 89(2); see II. Reserve Land Transactions ) 

8. Can a BCR by itself provide a financial institution legal access to a reserve for the purposes of inspecting and/or seizing the personal property of a First Nation or individual members of the First Nation?

 A stand-alone BCR cannot guarantee access to a reserve, since it is not a legally binding and enforceable agreement. 

9. What are the legal means by which a financial institution can legally enter on reserve land without committing a trespass?

 As noted in question 7, consent to enter a reserve to inspect and/or seize personal property may be provided under a conditional sales contract (since s.s.89(2) exempts this type of agreement from the general prohibition in s.s.89(1)). As well, if the contract is with the First Nation (as opposed to an individual), the council must have passed a BCR either authorizing or approving the execution of the contract in order for the financial institution to legally rely on it. A mortgagee who has a leasehold mortgage on designated land can also legally enter a reserve for the purpose of enforcing the terms of the mortgage. (s.s.89(1.1)) 

10. Is a BCR necessary for the purposes of inspecting and/or seizing personal property located on reserves?

 Generally no (from a technical standpoint). As noted above, creditors normally will have rights to inspect and/or seize personal property under a conditional sales agreement or a leasehold mortgage in designated land. In order for the financial institution to be able to rely on the agreement, a duly passed BCR would only be legally required where the First Nation itself, as opposed to an individual, has entered into a conditional sales contract 

11. Are there any other ways a financial institution can obtain legal access to a reserve?

 A permit issued by DIAND upon the consent of the First Nation (granted under subsection 28(2) of the Indian Act) may be a vehicle for obtaining access. (s.s(28(1); see I. Reserve Land Tenure, questions 13-15 on permits ). 

VI. BYLAWS

Sources: Indian Taxation Advisory Board and Native Law Centre, First Nations Gazette, Vol. 1, no. 1, 1997; Robert A. Reiter, The Fundamental Principles of Indian Law, 1994 

1. What is the statutory power of First Nation council bylaws?

 First Nation councils are delegated, federal legislative bodies, authorized under sections 81, 83 and 85.1. First Nation bylaws are statutory instruments of power under theStatutory Instruments Act. They have no force or effect outside the geographical boundaries of the reserve. Section 86 provides for the certification of true copies of bylaws by specific departmental officials in regional and district offices for the purpose of the prosecution of bylaw offences in court. 

2. What types of bylaws can First Nation councils make?

 Sections 81, 83, and 85.1 authorize the First Nation council to make bylaws. When a First Nation council has passed a bylaw, those under sections 81 or 85.1 are submitted to DIAND (Department of Indian Affairs and Northern Development) for approval and those under section 83 are submitted to the Indian Taxation Advisory Board (ITAB, see definitions) for approval. 

• Section 81 bylaws include: (g) the dividing of the reserve into zones, prohibition of construction, prohibition of any business; (h) regulation of building construction; (i) survey and allotment of reserve lands and establishment of a register. 
• Section 83 bylaws include expenditure, financial administration, business licensing, taxation, assessment and rates bylaws. 
• Section 85.1 covers intoxicants bylaws, such as prohibiting possession or sale of intoxicants on the reserve. 

 First Nation governments operating under specific self-government legislation have similar taxation authority. (refer to the appropriate self-government act)

3. What is the approval process for section 81 and 85.1 bylaws?

 When the First Nation council passes a section 81 bylaw, it must be sent to DIAND within four days. The Minister has the power of disallowance. If the Minister does not disallow the bylaw, it will come into force on the 40th day after the date of mailing. Bylaws are reviewed by the Band Governance and Estates Directorate, which may provide to the council feedback or suggestions for amendment. If the council decides to amend a bylaw, the unamended bylaw is in force until 40 days after the amended bylaw has been sent to DIAND. The process is the same when a bylaw is changed or revoked.

 Section 85.1 (intoxicant) bylaws come into force as soon as they have been passed by a majority of electors of the First Nation who attend and vote at a special meeting called by the First Nation council for the purpose of considering the bylaw. A copy of the bylaw must be mailed to the Minister within four days, after it is made. 

4. How can records of section 81 bylaws be found?

 At present, section 81 bylaws are not included in the First Nations Gazette. To obtain information about a certain bylaw, contact the First Nation. DIAND’s regional offices and headquarters also keep records of all section 81 bylaws. 

5. What is the approval process for section 83 bylaws?

 All section 83 bylaws are submitted to the ITAB office, where they are examined for: conformity with the Indian Act and the Charter of Rights; comprehensiveness; equity and natural justice; fairness; adequacy of notification and appeal procedures; and absence of ministerial liability. The Band Governance Branch of DIAND may also provide comments on bylaws which are in a form not previously approved by the Minister. Bylaws which have passed examination are submitted to ITAB members, who meet four times per year. Board members review all bylaws submitted in that quarter and formulate the Board’s recommendations to the Minister. When the bylaws have been approved by the Board, they are submitted to the Minister for formal approval. 

6. How are section 83 bylaws amended or revoked?

 This is done by passing a new bylaw. The original bylaw is in effect until the amending or revoking bylaw has been approved by the Minister. 

7. Why is there no officially sanctioned First Nations gazette?

 According to the Statutory Instruments Regulations, First Nation bylaws do not have to be published in the Canada Gazette. In 1996 an amendment to Bill C-25 was sought; it would have allowed the Clerk of the Privy Council to designate a First Nations Gazette as a mechanism for the registration, notification and publication of First Nation bylaws, as an alternative to the Canada Gazette. The amendment was not effected.

 ITAB, together with the Native Law Centre at the University of Saskatchewan, has initiated the publication of the First Nations Gazette to provide notice of new bylaws. The main focus is on property tax bylaws pursuant to section 83; it is anticipated that the First Nations Gazette may eventually publish notice and text of other First Nations laws. 

8. What information is included in the First Nations Gazette?

 All section 83 bylaws will be published (notice and full text) in the First Nations Gazette. Volume 1, No. 1 of the First Nations Gazette (1997) contains sample bylaws and a partial list of bylaws approved to May 1, 1997. Sample bylaws include “First Nation Business Licensing Bylaw” and “First Nation Financial Administration Bylaw.” Vol. 2, No. 1 was published in April 1998. The next issue will be published in August 1998. Each issue contains full text versions of bylaws passed pursuant to s.83. For subscriptions and contact information, see Resources. 

VII. FUNDING ARRANGEMENTS

For further information on funding arrangements, refer to DIAND (Department of Indian Affairs and Northern Development) Evolution from Direct Service Delivery to a Funding Agency,1993; Treasury Board of Canada Secretariat, Guide on Financial Arrangements and Funding Options, 1995; DIAND, Financial Management Manual (draft). (see Resources)

1. Who funds First Nations?

 Government funding is an important part of the annual budget of most First Nations and DIAND has the lead on behalf of the federal government in providing funding. A large portion (70 percent) of federal funds are provided by DIAND; other federal departments that fund First Nations include Health and Welfare Canada, Canada Mortgage and Housing Corporation, and Human Resources Development Canada. 

2. How will First Nations be funded in the future?

 As one of its Gathering Strength initiatives (DIAND’s January 1998 response to the Royal Commission on Aboriginal People, see Resources) DIAND is looking to develop a new fiscal relationship with Aboriginal people. In collaboration with provincial and territorial governments, the focus will be on a government to government transfer system which supports sustainable First Nation/Aboriginal governments. The long term goal is to support First Nation/Aboriginal governments with significant law-making powers that will be primarily responsible for matters affecting their citizens and communities. 

3. What is the difference between a “funding authority” and a “funding arrangement”?

 Funding authorities are the rules, set by the Treasury Board of Canada, that DIAND must adhere to when providing funding. Examples of funding authorities include: contributions, Flexible Transfer Payments (FTPs), and grants. (see question 5)

 A funding arrangement is the document containing terms and conditions by which a transfer payment is made by the Crown for the delivery of programs and services by the recipient First Nation. Funding arrangements range from one to five years; they are all subject to annual availability of funds from Parliament. (see question 4; see definition of “appropriated funds”)

4. What are the different funding arrangements available to First Nations?

 Comprehensive Funding Arrangements (CFA) (also known as Master Funding Arrangements in some regions) are the basic funding arrangements used with First Nations. A CFA consists of the following funding authorities: contributions, Flexible Transfer Payments (FTPs), and grants; it specifies which services are funded by each funding authority. CFAs have a one year duration.

 Alternative Funding Arrangements (AFA) were developed as an alternative to the CFA. AFAs provide the First Nation with greater flexibility than CFAs. Minimum program requirements are stated more generally and the First Nation may reallocate funds between program areas provided that:

 C    minimum program requirements are met;
C    minimum program requirements are met;
C    any capital project designated as mandatory, such as water and sewer, is
       completed. 

Generally, AFA agreements are funded on a multi-year basis for up to five years (subject to annual appropriation of funds from Parliament). Annual management reports, as well as audited financial statements are required. AFA funding agreements must adhere to Treasury Board’s AFA funding authority rules. Before entering into this agreement, a First Nation must have successfully completed an AFA entry assessment, which is a joint review of the First Nation’s accountability and management systems. AFAs are now being phased out and are being replaced by FTAs.

 The Financial Transfer Agreement (FTA) seeks to establish a revenue base for each First Nation, whereas CFAs and AFAs are based on funding a series of federally-defined programs. First Nation leaders work with their membership to establish long-term program priorities and are accountable to both their members and the government. The FTA is transferable into a self-government agreement. 

FTA funding is provided on a five year basis (subject to annual appropriation of funds from Parliament). A development plan may be required. An annual audit and an annual return with information regarding minimum program requirements are also required. First Nations must set out an accountability process for the use of public funds, to ensure visibility of their operations to community members. Although the details of the FTA funding arrangement differ from those of the AFA, the agreement still follows Treasury Board’s rules for AFA funding. 

The Canada Transfer Agreement, is a refinement of the FTA, created to transfer the funds of more than one federal department. 

A Contribution Agreement (CA) is used to fund specific programs or projects requiring significant interaction between DIAND and the recipient (e.g., major capital projects). It follows Treasury Board’s rules for “contributions.” 

Self-government funding arrangements are sometimes referred to as “grants;” however, self-government funding arrangements include terms and conditions. (refer to the appropriate self-government legislation)

5. What are the different funding authorities?

 These are the rules defined by the Treasury Board that DIAND must adhere to when providing funding. Funding authorities are described here in order of increasing First Nation control.

 Contribution authority involves significant terms and conditions which stipulate matters such as what service is to be provided, to whom it is to be provided, what expenses are eligible for reimbursement, and the reporting requirements. The reimbursement process involves financial and operational reporting throughout the year, and a year-end financial audit. Contribution Agreements (CAs) and Comprehensive Funding Arrangements (CFAs) use contribution authority.

 Flexible Transfer Payment (FTP) authority has simpler terms and conditions than the contribution. FTPs are provided for delivery of specific programs or services with defined results or program outputs, and the funding is based on a fixed amount rather than on the reimbursement of eligible expenses. Programs are funded separately. The First Nation’s accountability is to provide the products or services that were specified. FTP performance information is collected through program-specific reports submitted during the year and at year-end. Comprehensive Funding Arrangements (CFAs) include FTP`s.

 Alternative Funding Arrangement (AFA) is the funding authority developed to govern multi-year funding (i.e., not program specific funding) AFA authority is used for the funding arrangement of the same name (AFA) and also for the newer Financial Transfer Agreement (FTA).

 Grants are unconditional transfer payments which are not subject to being accounted for or audited, but for which eligibility and entitlement may be verified. Comprehensive Funding Arrangements (CFAs) include grants.
 
 

6. What information on individual funding arrangements is available to third parties from DIAND?

 DIAND may provide general information to third parties, such as the provisions within the funding arrangements and the First Nation’s historic funding levels. DIAND will not provide the First Nation’s credit ratings, nor information that is exempt from release under Access to Information legislation, such as the First Nation’s financial statements. 

7. Can funding payments be redirected to a financial institution?

 DIAND may accept to redirect payments due to a First Nation to a financial institution. The First Nation must make a request to DIAND, by way of a BCR, to redirect the payments. The First Nation must also provide DIAND with instructions regarding the process by which the funds are to be redirected. DIAND will provide confirmation in writing to the First Nation, indicating that there is no guarantee as to the level of funding (it is contingent on availability of funds (Appropriation Act) and on the First Nation satisfying the conditions of the funding arrangement). DIAND does not recognize “irrevocable” BCRs; council decisions can therefore be superseded by a new BCR. 

8. Are there enforceable agreements for redirection of payments to a financial institution?

 In Manitoba, DIAND has been involved in Tripartite Agreements with financial institutions and First Nations. DIAND may agree to enter a Tripartite Agreement only when the loan is used exclusively for meeting the objectives of the funding arrangement and the financial management plan. DIAND agrees to direct funds in care of the financial institution and to do so until the First Nation provides, in writing, new instructions and the consent of the financial institution to the new instructions. DIAND does not guarantee the level of funding, as it is contingent on availability of funds and on the First Nation satisfying the conditions of the funding arrangement. Tripartite Agreements have been used successfully but have not been tested in court. 

9. Can a First Nation assign future funding payments to a third party?

 When a First Nation agrees to assign its funds to a third party, the agreement is not enforceable and not recognized by DIAND. DIAND considers requests for re-direction of funds from the First Nation, not from the third party. 

10. Under what circumstances will DIAND withhold payments to a First Nation?

 If there is a serious default by the First Nation on delivery of services, DIAND will treat the problem as a corporate problem; it will review the First Nation’s overall management, and not just the area in which it is defaulting. DIAND may withhold payments; however, this is done as a last resort. Funding for essential services will be maintained; in extreme cases, this may be through a third-party administrator. 

11. Are there restrictions on borrowing imposed on a First Nation?

 There are no limits on indebtedness beyond the ability to repay the debt and the willingness of suppliers and financial institutions to provide credit or financing. However when the audit shows that a First Nation runs a cumulative deficit beyond eight percent of total annual revenues, it is required by DIAND to put in place a remedial management plan. 

12. If a First Nation has a surplus for completed projects or activities, can these funds be spent at its discretion?

 It depends on the funding authority:

 Contribution – No. Overpayments, unexpended balances and disallowed expenditures must be repaid.

 FTP – Yes. The First Nation may use non-capital surplus amounts at its discretion. 

Capital surplus amounts can be used for projects on the approved capital plan. Any deficit is the responsibility of the First Nation. 

AFA – Yes. First Nations can redesign programs and reallocate funds between programs based on its priorities. The only restriction is that capital surplus must be spent for capital purposes. Any deficit is the responsibility of the First Nation. 

Grant – Yes. Since the payment is not dependent on performance, surpluses can be redirected to other First Nation priorities. 

13. What are a First Nation’s obligations with respect to unexpended year-end balances for incomplete projects?

 Where a government funded project or activity is incomplete at year-end, the unexpended balance is a debt due to the Crown for agreements under contribution or FTP authority. It is recommended to auditors that this amount be carried on the First Nation’s balance sheet as a current liability (deferred revenue). The Crown may provide funds from its new year appropriation to allow the First Nation to complete the project or activity. 

Funding agreements using an AFA authority are typically signed on a five year basis. The First Nation can transfer funds according to community priorities (as long as capital funds are being used for capital purposes). At the end of the term of the funding agreement, the unexpended balances are treated treated in the same manner as an FTP authority. 

14. What are DIAND’s guidelines for dealing with a First Nation deficit?

 DIAND monitors the financial health of First Nations, primarily through the annual audited financial statements. The terms and conditions of the funding arrangements require a full financial review where a First Nation's cumulative deficit exceeds eight percent of total annual revenues. 

Where a problem is confirmed, the funding arrangement requires the First Nation to put into place a remedial management plan to preserve essential services, settle the debt and prevent recurrences. Where the problem is severe or a remedial management plan is not effective, DIAND may require that a co-manager or third-party manager be brought in. 

15. What are DIAND’s requirements regarding year-end financial statements?

 As part of their funding arrangements, First Nations are required to provide year-end audited statements. The Year-end Reporting Handbook (1997) provides further information, as well as sample financial statements. (see Resources) DIAND depends on financial statements to determine whether:
 
 

• the requirements of the Financial Administration Act have been met; 
• funds have been used for the purposes intended; 
• the terms and conditions of the funding arrangements have been met; 
• each recipient’s management and financial situation is sufficiently strong to assure the continued delivery of essential services. 

16. What accounting principles apply to the financial statements?

 The Handbook is based on the application of Generally Accepted Accounting Principles (GAAP), as defined by the Canadian Institute of Chartered Accountants (CICA). 

First Nations are not recognized in CICA’s Public Sector Accounting and Auditing Handbook (PSAAB rules, 1995). CICA has been approached to recognize First Nations for inclusion as government bodies within the standard. In the interim, DIAND asks that audits of First Nation governments be prepared in accordance with the PSAAB standards for local governments. The Handbook is intended to provide further direction where the PSAAB standards are silent. 

The Handbook provides a set of sample financial statements to illustrate a means of incorporating the PSAAB rules. DIAND provides sample financial statements for guidance only, recognizing that there are a variety of ways of incorporating PSAAB rules, depending on the circumstances of individual First Nations. The Handbook also provides accounting information for tribal councils and other First Nation organizations, and reports requirements for recipients of trust funds (Indian Moneys). 

On March 30, 1998, the Assembly of First Nations (AFN) and the Certified General Accountants’ Association of Canada (CGA-Canada) signed a Memorandum of Understanding to establish a framework for financial reporting and control, establish a related code of ethics, and enhance the accounting skills of First Nations. The two organizations will work together to determine financial reporting needs, develop financial systems and assess existing skill levels of First Nations in carrying out financial reporting requirements. For more information contact: 

VIII. INDIAN MONEYS

Refer to DIAND (Department of Indian Affairs and Northern Development) Manual for the Administration of Band Moneys, 1997 for further information on Indian Moneys. (see Resources)

1. What are Indian Moneys?

 Indian Moneys are derived from the sale of an interest in reserve land (including oil, gas, timber, etc.) or from revenue generated from leasing, rights of way, etc. The money is collected by the Crown and is thus “public money.” The money is deposited into capital or revenue accounts in the Consolidated Revenue Fund and held in trust under the name of the First Nation for which it was collected. 

Note: Although Indian Moneys include accounts held for certain individuals such as minors, deceased persons, adoptees, etc., in this document the term will be used to refer to accounts held for a First Nation community. (see definitions of “public money” and “Indian moneys”)

In accordance with the Indian Act, there are expenditure restrictions for each type of account. For most First Nations, Indian Moneys are a small part of the budget; however over 35 First Nations have Indian Money accounts in excess of $1million. 

2. What are “capital moneys” and “revenue moneys”?

 Capital moneys are Indian Moneys derived from the sale of surrendered lands, or the sale of the capital assets of a First Nation (including royalties, bonus payments and other proceeds from the sale of timber, oil, gas, gravel or any other non-renewable resource). (s.62) 

Revenue moneys are Indian Moneys which are not capital moneys. They are derived from a variety of sources which include, but are not limited to, the interest earned on Indian Moneys, fine moneys, proceeds from the sale of renewable resources (not including timber), leasing activities (e.g., commercial leasing ventures, cottages, land for agricultural purposes) and rights of way. (s.62) 

Within the Consolidated Revenue Fund (CRF), capital and revenue accounts are set aside for First Nations. DIAND generally maintains one capital account and one revenue account per First Nation (approximately 1,200 accounts in total). (see definition of “Consolidated Revenue Fund”)

3. What are the Minister’s responsibilities with respect to Indian Moneys?

 The Minister has a trust-like duty over Indian Moneys. DIAND is responsible for administering the Indian Moneys provisions of the Indian Act.

All revenues collected by the Crown from transactions related to reserve lands (such as sale of land, capital, renewable resources, leasing, right of way, etc.) are Indian Moneys and must be deposited into the Consolidated Revenue Fund (CRF) trust accounts. 

The Minister or his/her delegate is also responsible for approving the release of all Indian Moneys and for subsequently reviewing band audits to confirm that funds were actually spent by the First Nation for the purpose approved by the Minister. 

4. How can a First Nation opt to manage its revenue moneys?

 A First Nation can opt to obtain section 69 authority. Subsection 69(1) enables a First Nation to “control, manage and expend” its revenue moneys (not capital moneys). With this authority, the First Nation, not DIAND, determines the benefit of the expenditure to the First Nation. About 70 percent of First Nations have section 69 authority. 

Section 69 authority is only granted with the support of a majority of First Nation members, as determined by a vote. Once a First Nation receives section 69 authority over its revenue moneys, it assumes full responsibility for all revenue expenditures that are requested by the council. This includes determining whether any given expenditure will be for the general progress and welfare of the First Nation and its members. DIAND will not require substantiation that a release of revenue moneys will benefit the First Nation, but will rely on the expenditure decision made by the council. Duly elected Chiefs and councillors are fiduciaries for all members of the First Nation, and these fiduciary obligations are legally enforceable by First Nation members. 

5. Are oil and gas royalties “Indian Moneys”?

 Yes, revenues from oil and gas royalties are Indian Moneys. They are managed by Indian Oil and Gas Canada (IOGC) and are deposited into capital moneys accounts by IOGC. 

6. Do Indian Moneys earn interest?

 Accounts earn interest which is equivalent to the market yield of bond issues having a maturity of 10 years or over (even though the moneys may be held in CRF accounts for less than 10 years). Tax is not charged on the interest earned. 

7. What are the expenditure restrictions of capital and revenue moneys?

 The expenditure of capital moneys is addressed in s.s.64(1). This lists the expenditure of capital moneys for a number of specific purposes such as the construction of housing, roads, fences; purchasing livestock; loans to members, etc.; and “any other purpose that in the opinion of the Minister is for the benefit of the Band.”> Subsection 66(1) allows revenue moneys to be expended for any purpose that, in the opinion of the Minister, “will promote the general progress and welfare of the Band or any member of the Band.”

8. Can Indian Moneys be used for investments or to secure a loan guarantee?

 Investing in stocks, bonds or GICs does not constitute an expenditure of Indian Moneys and is thus not deemed permissible under s.64 and s.66. Use of Indian Moneys to secure a loan guarantee does not constitute an expenditure (since the expenditure does not occur unless the First Nation fails to pay off the loan). Therefore, the use of Indian Moneys as collateral for a loan to a First Nation, as well as line-of-credit arrangements, are not permissible under s.64 and s.66. However, loan guarantees for housing purposes are allowable pursuant to paragraph 64(1)(j). 

9. What is the process for an expenditure of Indian Moneys?

 The process is initiated when a First Nation council adopts a Band Council Resolution (BCR) requesting a release of Indian Moneys from the trust account. In some cases, for example if the money is being used to pay debts, a membership vote can be requested. The BCR is sent to the appropriate regional or district office of DIAND. If the First Nation has section 69 authority and the request is for revenue money, the money is usually released immediately. (There may be a delay if, for example, an environmental assessment is required.) For First Nations without section 69 authority, the regional office analyses the request, assesses whether the expenditure would benefit the First Nation and its members and approves or denies the request. 

At the end of each fiscal year, First Nations must submit an independent audit of their Indian Moneys to show that they were spent as originally approved by the Minster. 

10. What revenues are not considered “Indian Moneys”?

 Revenues that are not deposited into CRF trust accounts, are not Indian Moneys. Own-source revenues that are not Indian Moneys include property taxes, grants in lieu of taxes from utility companies, resource revenue sharing, and profits from community-owned businesses (including casino revenues). 

As explained above, all revenues derived from the sale of reserve land resources (renewable and non-renewable) are Indian Moneys. 

11. Are own-source revenues assignable?

 Own-source revenues that are not governed by Indian Moneys legislation can be assigned. Section 89 restrictions may apply. 

IX. CLAIM SETTLEMENTS

1. What are the different types of claims?

 Comprehensive Claims are based on the recognition that there are continuing Aboriginal rights and title to lands and natural resources. Comprehensive claims arise in those parts of Canada where Aboriginal title has not been dealt with by treaty and other legal means. They include land title, fishing and trapping rights, financial compensation and other social and economic benefits.

 Specific Claims deal with specific grievances that First Nations may have regarding the non-fulfilment of treaties and other lawful obligations, or from the alleged improper administration of lands and other assets under the Indian Act or other formal agreements. 

Treaty Land Entitlements are a special type of specific claim. They involve claims for land under existing treaties. 

2. Are there conditions for the use of funds from claim settlements?

 That depends on the type of claim agreement:

 Comprehensive claims funds are granted with no conditions – the use of the funds is determined by the First Nation. Normally funds are deposited into a “settlement trust” where they can earn tax-free interest under a number of conditions specified in the land claim agreement. 

Specific Claims vary depending on how the First Nation negotiates the agreement. Usually, the purpose for which the funds will be used is stated in the settlement agreement; often it is for the purchase of lands. Most First Nations have the settlement funds paid into a trust account managed by appointed trustees; however, some have it placed into a revenue account maintained by DIAND. Some First Nations also request a per capita distribution of a portion of the funds. 

Treaty Land Entitlement (TLE) funds are designated for the purchase of land. For the Saskatchewan TLE Framework Agreement (1994), settlement funds are kept in trust accounts managed by trustees (not the First Nation council). Funds must be spent on acquiring land up to a stated number of short-fall acres. The TLE settlement agreement prohibits a First Nation from pledging the funds. When the stated amount of acreage has been acquired and put into reserve status, remaining funds can be used for “band development.” Interest from the TLE trust funds may be kept in a revenue trust account. They are used to cover “authorized expenses” associated with acquiring land (e.g., acquisition expenses, honoraria for attending meetings). Any remaining funds from the revenue trust account can be released into the First Nation’s account by the trustees. 

3. What is the status of comprehensive claims in Canada?

 Thirteen comprehensive claim agreements have been settled since 1975:
 
 

The James Bay and Northern Quebec Agreement (1977) 

Settlement cost: $225 million 

The Northeastern Quebec Agreement (1978) 

Settlement cost: $9 million 

The Inuvialuit Final Agreement (1984) 

Settlement cost: $152 million plus $17.5 million economic enhancement and social development funds 

The Gwich'in Agreement (1992) 

Settlement cost: $75 million over 15 years, plus a share of resource royalties from the Mackenzie Valley 

The Nunavut Land Claims Agreement (1993) 

Settlement cost: $1.17 billion over 14 years, plus a share of resource royalties 

The Sahtu Dene and Metis Agreement (1994) 

Settlement cost: $75 million over 15 years, plus a share of resource royalties from the Mackenzie Valley 

Yukon First Nations Claims: 

The Vuntut Gwich’in First Nation (1995); The First Nation of Nacho Nyak Dun (1995); The Teslin Tlingit Council (1995); The Champagne and Aishihik First Nations (1995); The Little Salmon/Carmacks First Nation (1997); and The Selkirk First Nation (1997). The Tr’ondëk Hwëch’in First Nation (1998) Settlement cost: $137.5 million to be paid out over 15 years 

• Algonquins of Pikwakanagan (Golden Lake) (Ontario side of the Ottawa River watershed) 
• Atikamekw and Montagnais Claim - three tables - Conseil de la Nation Atikamekw, Mamuitun (Montagnais) and Mamit Innuat (Montagnais) 
• Deh Cho First Nations (N.W.T.) 
• Innu Nation Claim (Central Labrador and northern Quebec) 
• Labrador Inuit Association (LIA) Claim (coast line, interior and offshore of northern Labrador) 
• Makivik Offshore Claim (Offshore area adjacent to northern Quebec & Labrador, and inland northeast Labrador) 
• Nisga’a Claim - Final Agreement has been initialled on August 4, 1998. The Nisga’a have now entered into their ratification process 
• Salt River First Nation (N.W.T.) 
• South Slave Métis Tribal Council (N.W.T.) 
• Treaty 8 Dene (N.W.T.) 
• Treaty 11 Dogrib Claim (N.W.T.)