Frequently Asked Questions - First Nations Commercial And Industrial Development Act

What is the First Nations Commercial and Industrial Development Act?

The reserve lands of many First Nations have the potential to be used in large-scale commercial and industrial projects – be they oil sands, hydro-electrical projects or large real estate developments. Given the amount of money required to get such large-scale projects off the ground, they are usually developed in partnership with private sector investors.

FNCIDA enables a First Nation that has decided to pursue a large-scale commercial or industrial on-reserve project to ask the Government of Canada to develop regulations applying to a specific project on a specific piece of reserve land. FNCIDA works by essentially reproducing the provincial rules and regulations that apply to similar large-scale commercial or industrial projects off reserves and applying them to a specific on-reserve project. This approach, called incorporation by reference, ensures that on- and off-reserve projects are subject to similar regulatory regimes. It increases the certainty for investors, developers and the public while minimizing costs.

This case-by-case approach means that the unique needs and circumstances of each project can be respected, as can the Government of Canada's unique relationship with, and responsibilities toward, First Nations. Agreements between the Government of Canada, individual First Nations and the provincial government will be developed to enable the province to carry out the monitoring and enforcement of FNCIDA regulations for particular projects. In practice, this means that projects regulated under FNCIDA are required to meet similar standards as those that apply in the rest of the province and it gives investors and developers certainty by ensuring that they are dealing with regulations and regulators that they know and understand.

The goal of FNCIDA is to enable First Nations to develop their economies, provide more tools to manage their resources, increase self-sufficiency and enhance their quality of life. FNCIDA was passed into law with all party support in the House of Commons. It received Royal Assent in November of 2005 and came into force on April 1, 2006.

How did FNCIDA come about?

FNCIDA was a legislative initiative led by five First Nations with the potential for large-scale on-reserve commercial or industrial projects. All five partnering First Nations passed Band Council Resolutions in support of FNCIDA. In collaboration with the five partnering First Nations, the Government of Canada worked to develop and pass FNCIDA into law. The five First Nations were the Squamish Nation of British Columbia; Fort McKay First Nation and Tsuu T'ina Nation of Alberta; Carry the Kettle First Nation of Saskatchewan, and Fort William First Nation of Ontario. These five partnering First Nations took a lead role in reaching out and engaging other First Nation communities across Canada, providing information and generating support for FNCIDA. Their efforts included outreach with national and regional First Nations organizations in the fall of 2005.

What is a regulatory gap? What is the impact of a regulatory gap?

A "regulatory gap" is the absence of adequate laws (including regulations and monitoring and enforcement systems) to govern an activity. Regulatory gaps occur on reserve lands where there is an absence of appropriate laws, applicable on reserve, to govern complex commercial or industrial activities. The result is that some proposed on-reserve projects are difficult or impossible to approve, finance or finalize. A regulatory gap creates uncertainty with respect to the process, time and costs associated with a project, and can divert potential investors from First Nation reserve lands to off-reserve jurisdictions where an established and familiar regulatory framework exists. Off-reserve commercial and industrial activities are governed by comprehensive provincial statutes and regulations that the province updates periodically. However, the elements of provincial regulatory regimes that relate to land use do not apply to reserve lands because the Government of Canada has exclusive authority to make laws respecting "Indians, and Lands reserved for the Indians" under S. 91(24) of the Constitution Act, 1867.

Why do First Nations want to be able to fill on-reserve regulatory gaps?

Filling regulatory gaps will help First Nations to realize economic development opportunities on reserves. First Nations across Canada are pursuing economic development initiatives to improve economic and social conditions on their reserves. Increasingly, they are seeking on-reserve development of complex and large-scale commercial and industrial projects. These kinds of projects create employment opportunities for First Nation members and generate significant ongoing revenue for First Nation governments, but they are often not possible because of on-reserve regulatory gaps.

Why is FNCIDA necessary?

The experience of the five First Nations that approached and worked with the Government of Canada to develop FNCIDA was that the investors and developers looking to participate in large-scale on-reserve commercial and industrial projects with First Nations are more comfortable with a business environment where they know the rules and have experience working according to those rules. First Nations can always choose to establish their own regulations and create the agencies required to monitor, enforce and update those regulations. However, potential investors may prefer to deal with regulations and regulators with which they are already familiar.

Is FNCIDA the right tool for our project?

Before considering FNCIDA, a First Nation should determine for itself if it wants to proceed with a proposed project. Then, both the First Nation and Aboriginal Affairs and Northern Development Canada will need to consider whether project regulations under FNCIDA are the best way to govern the project activities. The First Nation, the proponent, Aboriginal Affairs and Northern Development Canada's regional office, and other stakeholders should engage in initial exploratory discussions to consider the following questions:

  • Does the project involve significant regulatory gaps?
  • If there are regulatory gaps, does the First Nation want to address the gaps in some other way?
  • Is there potential for the province to take on the role of administering and enforcing the FNCIDA regulations?
  • Can all other legal and policy requirements be met to enable Aboriginal Affairs and Northern Development Canada to issue land tenure (leases or permits) for the project?

Does FNCIDA apply to all First Nations and all of their lands?

FNCIDA specifies that the federal government only has the authority to make regulations once it has received a Band Council Resolution from the First Nation requesting the regulations. Only First Nations that request a regulation under FNCIDA, and for whom a regulation is in fact made, are affected. Regulations under FNCIDA can apply only to lands that are "reserve" within the meaning of sub section 2(1) of the Indian Act and only to those portions of reserve land described in the regulation. This is often specific to the project site. This means that regulations will not be made under FNCIDA to apply to First Nations lands that are subject to sectoral or comprehensive governance agreements.

How much does it cost to develop regulations under FNCIDA and who pays?

Costs will largely depend on the scale and complexity of the project and the regulatory gap. All parties are responsible for their own costs in the development of the regulations, including costs for their own technical, financial and legal advice. Examples of activities that may raise First Nation costs include the following:

  • meeting, negotiating and finalizing the deal with investors or commercial/industrial partners;
  • developing the proposal for regulations under FNCIDA;
  • consulting members of the First Nation (and possibly conducting a designation vote); and,
  • meeting and negotiating with other parties regarding the proposed regulations and intergovernmental agreement.

The Government of Canada will incur costs related to analyzing the First Nation proposal for regulations under FNCIDA; meeting with parties; deciding whether to proceed with the development of regulations; negotiating and taking the lead in drafting the regulations and intergovernmental agreement; and moving the regulatory package through the Cabinet approval processes. The provincial government will incur costs related to participating in meetings, providing information about the provincial regulatory regime and negotiating the intergovernmental agreement. The industry partner may incur costs related to participation in meetings; providing information about the project and the provincial regulatory processes; and providing input to the proposed regulations.

Are there other ways for First Nations to advance complex commercial and industrial projects that involve regulatory gaps?

In some cases, yes. Under the First Nations Land Management Act (FNLMA), the First Nations Oil and Gas and Moneys Management Act (FNOGMMA) and other sectoral governance arrangements, some First Nations can develop their own regulatory regimes to address certain kinds of regulatory gaps. However, not all First Nations are subject to FNLMA or FNOGMMA and not all types of regulatory gaps can be addressed under FNLMA or FNOGMMA.

Will regulations be required for projects already operating on reserves?

Regulations will only be made on the request of a First Nation and will not be required for existing or new projects already routinely undertaken on reserve. In certain cases, First Nations or Aboriginal Affairs and Northern Development Canada may become aware of complex or large industrial or commercial projects already operating on a reserve that involve significant regulatory gaps. In such a case, just as they would for a proposed new on-reserve project, the First Nation and Aboriginal Affairs and Northern Development Canada may consider whether regulation of the project under FNCIDA would be desirable. As with a proposed new on-reserve project, determination as to whether the regulatory gap should be filled would include an assessment of the nature and extent of the regulatory gap (including the existing provincial regulatory regime), risks involved in the project and the costs and benefits of regulating the project under FNCIDA.

Does this initiative affect ownership of reserve lands and resources?

No. There is no change in ownership of reserve lands and resources. If the First Nation, the Government of Canada and the province agree that the province will administer and enforce federal regulations under FNCIDA on the First Nation's reserve lands, the province will do so on behalf of the Government of Canada. This role will be set out in a tripartite agreement.

What is the relationship between this initiative and other federal legislation?

Some federal legislation, such as the First Nations Land Management Act, the First Nations Fiscal Management Act and the First Nations Oil and Gas and Moneys Management Act, provide First Nations covered by the legislation with certain legislative powers. Not all First Nations are presently subject to these Acts. Some will not participate in these Acts in the future either. In some cases, the law-making powers of a First Nation may be adequate to allow it to regulate on-reserve projects in essentially the same way as could be accomplished under FNCIDA. In other cases, a First Nation will not have adequate powers to replicate the relevant provincial regulatory regime.

What would happen if a regulation made under FNCIDA conflicted with other federal regulations that apply to reserve lands, or with a law of the First Nation?

A number of federal regulations, including regulations made under the Indian Act, apply to reserve lands. FNCIDA specifies that regulations made under other federal Acts prevail over FNCIDA regulations to the extent that any conflict or inconsistency arises, unless the FNCIDA regulations provide otherwise. FNCIDA also specifies that FNCIDA regulations prevail over a First Nation's laws (including by-laws) to the extent that any conflict or inconsistency arises, unless the FNCIDA regulations provide otherwise.

Does FNCIDA mean that provinces will have jurisdiction on reserves?

No. There is no expansion of provincial jurisdiction on reserves. FNCIDA regulations are federal, not provincial regulations. The federal regulation can incorporate the provisions of the provincial regulatory regime that, for constitutional reasons, don't apply to projects on reserve lands. This effectively fills the gap in cases where there are rules for large-scale commercial or industrial projects off a reserve but not on a reserve. The result is that the same rules will apply to the project on a reserve as would apply to it if it were off a reserve. This also makes it easier for certain kinds of projects to operate partially on and partially off reserve.

Does FNCIDA change Canada's legal relationship with First Nations?

No. FNCIDA doesn't reduce the Government of Canada's fiduciary duty to First Nations. The Government of Canada has special legal obligations towards First Nation people. These obligations are clearly established in treaties, the Indian Act and the Constitution, as well as in other legislation. FNCIDA in no way changes the legal basis of this relationship. FNCIDA simply allows a First Nation to request the Federal Government to develop, in partnership with the First Nation, regulations that would allow for a large-scale commercial or industrial project on reserve to proceed. In this process, the First Nation would agree to regulations that would be similar to those that apply in the rest of the province off of reserves. This gives investors and developers increased certainty by ensuring that they are dealing with regulations and regulators with which they are already familiar.

What are the objectives of the amendments to FNCIDA?

Bill C-24, the First Nations Certainty of Land Title Act, amended FNCIDA so that interested First Nations could explore new economic development opportunities on reserve land through the development of commercial real estate. To date, such projects have been hindered by lower values for on-reserve properties due to differences in the property rights regime on and off reserve land. Specifically, the bill would enable the creation of a system that would replicate the provincial land titles or registry system.

Where can I find more information on FNCIDA?

If you are interested in FNCIDA and would like further information to see if FNCIDA is the right tool for you, please contact the AANDC regional office closest to you or call 1-800-567-9604.