Thank you for the opportunity to speak on the issue of first nations land management and sustainable economic development. In general, my research examines how existing land tenure regimes on Canadian Indian reserves limit or facilitate economic development.
A common misconception is that indigenous peoples living on reserves have no individual property rights. Although it's true that ultimate legal title to reserve land resides in the crown, and that Indian bands collectively administer these lands in accordance with the Indian Act, band members, as Chief Whiteduck indicates, actually have access to three types of individual property. The most common are customary rights. The second, less common, are certificates of possession, and then there are a wide variety of different types of leases.
Today, due to time constraints, I'm going to focus my comments on customary rights and CPs, certificates of possession, since I think they create the most drag on development in terms of land tenure regimes, and therefore are in need of possible reform.
The most common form of individual property rights on reserves is the customary right. This type of property right has no direct statutory basis, but instead emerges as a result of either the historical usage of lands by individual members or families, the community recognition of those usage rights, or band council resolutions that either create or affirm these types of usage rights. Once a member gains a customary right to an individual parcel of reserve land, they can do a number of things with it, like build on it, improve it, farm it, sell it to another band member, and in some cases devise it in a will.
However, because customary rights have no statutory basis in Canadian law, their existence is entirely dependent on the support of the band council. In short, this means that the band can determine how the individual uses the land. It also means that the band council can at any time repossess the land for community purposes, like building a school or building another type of community building. Now, if the band council does expropriate the land and expropriate the customary right, the band member has no legal recourse to prevent the band council from doing so.
One of the implications of customary rights for economic development on reserves in terms of advantages is that indigenous communities like them because customary rights are seen as being consistent with their cultural norms. In my interview work with first nations communities in British Columbia, Alberta, and Ontario, members have told me that some communities feel that the band as a whole, rather than the individual, should benefit from the land. The lack of security of tenure of these rights is in fact an advantage in some ways, since if the community needs the land and if it privileges communal ownership of the land, it can easily reacquire it and use those lands for community purposes.
Band members also seem to value customary rights because it gives them a direct connection to their cultural heritage, so there's value there as well. Recall that many of these rights emerge out of historical practices and usage.
Finally, customary rights are advantageous because they're only subject to one level of government, which is the band council. So band members, when they want to use these customary rights, don't have to deal with multiple levels of government and bureaucratic procedures.
Despite these advantages, there are some disadvantages with customary rights. For one, they are not enforceable in Canadian courts. Second, the fact that the band council is the sole authority over customary rights is a potential problem, especially in small communities where politics and personal connections can more easily collide. It's not to say that they always collide, but it's more likely in smaller communities. Third, the lack of security of tenure, because they're not enforceable in Canadian courts, can discourage band members from pursuing on-reserve economic development, since the band council can revoke a customary right at any time.
A second type of property right available to band members is the certificate of possession, and unlike customary rights, CPs in fact do have a statutory basis. They're actually found in the Indian Act, and as such, they are in fact legally enforceable in Canadian courts, so they have much stronger security of tenure. To get a CP, a band member usually applies for one from the band council. Once the band council decides to allot the CP to the band member, the CP must be approved by the Minister of Aboriginal Affairs. Once approved, the band member is basically issued the CP and gains, in the language of the Indian Act, “lawful possession” to an individual tract of reserve land.
Much like customary rights, CP holders can use their land for a variety of purposes—build a house, build a farm, or put up any other building on their property—but unlike customary rights, they can actually use their land without any fear of squatters, or the band council, or any other third party interfering with their lands. So the security of tenure is much stronger than the customary right.
Besides creating positive incentives for individuals to maintain their land and use it to generate economic activity, the security of tenure that's inherent in CPs provides other important economic advantages.
Some of the obstacles to economic development on reserves are sections 29 and 89 of the Indian Act, which constrain band members from mortgaging their reserve lands, or to obtain mortgages on the basis of their reserve lands, to build housing or start a business.
Now, a number of first nations have found innovative ways to get around these obstacles by transferring their CPs to the band council, for instance, for the life of the mortgage or the loan. The band council will hold the CP for the life of the loan. In the event of a default by the individual member, the band council will then either absorb the monetary loss, if the band was the one that lent the money to the band member, or it will pay off the bank, if the bank provided the mortgage or loan. Then the band council would sell the CP to another band member to sort of help make up for the money lost in the defaulted loan.
The key to success here in getting around these major obstacles—sections 29 and 89 of the Indian Act—is the security of tenure provided by the certificate of possession.
Now, CPs, despite their many advantages, also have disadvantages. For one, they can only be transferred between band members, meaning that the property markets on these reserves tend to be relatively small. Second, and more importantly, CPs are subject to what are called “significant transaction costs”. In other words, the amount of red tape attached to using CPs can be actually quite staggering because of the need for due approval. You need to get the approval of the band council, but you also then need to get the approval of the aboriginal affairs minister.
At Six Nations, for instance, in Ontario, the average time to process a CP transfer between band members—this was four years ago, when I did this research—could range anywhere from three months to a year. In some instances, transfers have taken much longer, ranging from a year to, in one case, eleven years. The delay at this point was in Ottawa.
So although CPs provide members with more economic tools, with stronger security of tenure than customary rights, they are still limited by significant transaction costs as well as by restrictions on to whom CPs can be transferred. They are limited to being transferred between band members.
In short, aboriginal peoples on reserve do have access to a range of individual property rights, and all of these property rights have advantages and disadvantages. My analysis has been a very narrow one, which is to look at the security of tenure of these regimes and the transaction costs involved in using them. I just want to make it clear that this is the frame I'm using.
In general under this frame, the property rights, in my view, pose a significant constraint on sustainable aboriginal economic development, either because the security of tenure is weak, in the case of customary rights, or the transaction costs of using them are high, in the case of certificates of possession.
Based on this analysis, I would make the following recommendations. I've grouped them in terms of two categories. One is a set of recommendations on how to strengthen and improve existing property regimes under the Indian Act. The second grouping would be on how to create new property regimes that are separate and perhaps more efficient and effective than the current Indian Act regimes.
The key to all of these suggestions, however, is not to impose these reforms on first nations. I think history has taught us about the negative impact that has and how well that works. The key is to listen to what first nations want and need, what individual first nations want and need, and to work with them to develop appropriate solutions to their individual contexts.
In terms of the first category of reforms that I'm suggesting, in terms of improving existing property regimes under the Indian Act, my first suggestion is to work with those first nations who want to in order to strengthen the security of tenure of customary rights. So first nations that want to strengthen the security of tenure of customary rights should be given government support in the form of money and in the form of expertise to more fully document their customary rights.
Right now, the way in which customary rights are recorded across the country really varies, from very formal documents with all sorts of surveys and detailed information to places where there is no documentation at all, except for whatever the community holds as an informal collective memory of “who owns what”.
Along with better documentation, I would suggest the federal government consider helping interested first nations to develop band council resolution models that treat customary rights as binding written contracts that list comprehensively all the information about the land: who owns the land, a survey of the land, the types of activities that the band member is permitted to do on the land, and a clause that specifies under what conditions the band can expropriate the land and revoke the customary right.
Then the federal government should also support interested first nations in developing band-created or, perhaps better yet, regional first nation land adjudication committees, or first nation courts so that land allocation decisions and land dispute resolution decisions are made by an impartial legal body created by first nations rather than by political bodies.
That's for the customary rights. In terms of improving the certificate of possession system, I would suggest eliminating ministerial and perhaps band council involvement in CP transactions, not in terms of allotting but certainly in terms of using the CP, and being able to sell it and subdivide it. In my view, these restrictions are unnecessary and create significant drag on the time it takes to transact a CP. As well, I would suggest working with those interested first nations to allow band members to be able to transfer CPs out of the band to other band members from selected different reserves, in the hope of creating perhaps a more efficient and larger marketplace. The first nation would obviously decide which other first nations those lands could be transferred to, but the land would stay within first nations.
Finally, I would consider changing the land registry system that we use right now for CPs in Ottawa, which is an awful system, quite frankly, to a Torrens land registry system, which is much more secure and searchable than the current one.
So those are my suggestions for improving existing regimes in-house within the Indian Act, but I would also suggest that we consider proposals for alternatives to the Indian Act regimes. I think the federal government should encourage first nations to work with the crown to develop parallel land management and parallel land tendering legislation that would sit alongside the Indian Act and which first nations could voluntarily opt into, which would mean that those first nations who did so would no longer be subject to the land management provisions of the Indian Act.
A good example of this that's already in practice is the First Nations Land Management Act, which was an initiative of 11 and later 14 first nations. The first nations wanted this parallel legislation, and under this legislation the first nations are allowed to develop their own land codes for managing their property rights in more culturally and locally sensitive ways.
Another example that's currently working through the system is legislation being developed by Chief Manny Jules. The First Nations Property Ownership Act would involve first nations voluntarily opting in to this legislation to gain first title and jurisdiction to the reserve lands. So the crown would transfer title and jurisdiction to the first nations, who would own these lands forever. Then the first nations would have the ability to allot fee-simple ownership rights to their members. They could allot 10% of the land, 50% of the land, or none. It's up to them. And then these rights would be registered in a new national Torrens land registry system controlled and administered by first nations.
In short, I think two of the main obstacles to economic development on Canadian Indian reserves is the lack of security tenure and/or the high transaction costs inherent with the property rights under the Indian Act. Solutions should try to address these two problems, not only by strengthening the property rights in the Indian Act for those first nations that want to, but also encouraging first nations to develop and opt into parallel legislation that provides them with new forms of land tenure to pursue economic prosperity in this country.