First Nations Tax Commission – Commission de la fiscalitè des premières nations
Ontario Lottery and Gaming Corporation v. Mississaugas of Scugog Island First Nation 2019 FC 813

Ontario Lottery and Gaming Corporation v. Mississaugas of Scugog Island First Nation 2019 FC 813

On June 14, 2019, the Federal Court released its decision Ontario Lottery and Gaming Corporation v. Mississaugas of Scugog Island First Nation, upholding the First Nation Tax Commission’s approval of the First Nation’s Sewer Fee Law enacted under the First Nations Fiscal Management Act (FMA).  The decision provides strong support for First Nation self-government through the exercise of tax jurisdiction, for the role of the Commission in supporting First Nations in the exercise of their jurisdiction, for the Commission’s standards and processes, and for the principle of First Nation self-determination reflected in the FMA framework and within the mandates of the Aboriginal Institutions it establishes.

The case involves an application for judicial review brought by the Ontario Lottery and Gaming Corporation (OLG) of the Commission decision to approve a 2017 sewer fee law (the Law) made by the Mississaugas of Scugog Island First Nation (the First Nation). The Law was enacted using the fee law power set out in paragraph 5(1)(a.1) of the FMA, and levies fees on users of the First Nation’s sewer and wastewater treatment plant services.  OLG was subject to the fees levied under the Law as the then-operator of a casino located on the First Nation’s reserve lands. OLG sought to have the Commission’s approval of the Law overturned in order to invalidate the Law and the fees levied under the Law.

OLG advanced a number of arguments in support of its application; however, its primary argument was that the Commission should have engaged in much closer scrutiny of the Law, including the supporting document prepared by the First Nation known as the “Fee Law Report,” and satisfied itself that the fees to be charged reflected the projected costs of the service.  OLG argued that the Fee Law Report did not contain sufficient information to establish the required connection – or nexus- between the fees and the cost of providing the service.

The Court rejected OLG’s arguments, finding that the role of the Commission is to ensure compliance of the Law with the legislative framework and not to engage in a detailed audit of the service costs.  The Court based its decision on four interrelated reasons.

First and perhaps most importantly, that the FMA is aimed at facilitating self-government. First Nations are exercising their self-determination by opting into the FMA and exercising their law-making powers. The Court stressed that, subject to certain restrictions, the First Nation is the law-making government who informs the policy of its laws.

Second, that Parliament intended for the Commission to play a “narrow but significant role in the exercise of self-government by First Nations.” That role is to ensure compliance with a set of minimal standards, including defining those standards and applying them.

Third, that the specific content of the Commission Standards for First Nation Fee Laws relates mainly to transparency and process, as well as some substantive limitations.  The Court emphasized that under the Standards it is not for the Commission to decide how the service should be provided, or at what cost, as those are decisions for the First Nation. In reviewing the Standards, the Court concluded that, “taken together the requirements contribute to ensure that fee laws are applied in a manner consistent with the rule of law principle” and that “the Commission understands its role in a manner consistent with the purpose of fostering self-determination.”

Finally, the Court reviewed key aspects of the FMA that ensure transparency and accountability for ratepayers, including the local revenue account, audit and expenditure requirements. The Court concluded that the overall scheme of the FMA provides the mechanisms necessary to ensure its transparency and accountability objectives.

After reviewing the role of the Commission, the Court then considered whether the Commission’s decision to approve the Law was a reasonable decision based on the information before the Commission. The Court concluded that the Commission’s decision to approve the Law was reasonable, including that it was reasonable for the Commission to decline to give effect to the arguments OLG advanced in its written representations to the Commission (made under section 7 of the FMA).

The Court also considered a number of procedural fairness arguments raised by OLG, including that it did not know “the case to meet” when making its representations, that the Commission did not disclose enough information justifying the Law approval, and that the Commission should have given reasons for its approval decision.  In rejecting these arguments, the Court stated that the arguments were based on a misconception that the Commission’s approval process is adversarial.  The Court made two important points:

  • that Commission approval is part of the First Nation law-making process and reasons are therefore not required; and,
  • that the FMA sets out all procedural requirements that must be followed in law-making.

In dismissing the application, the Court gave the following final endorsement to the Commission’s law approval process:

OLG has not shown that the Commission’s approval of the Fee Law was unreasonable or breached the requirements of procedural fairness.  In fact, the Commission did exactly what Parliament intended it to do and, in doing so, fully complied with the provisions of the Act.

This is the second time the Federal Court has been asked to overturn a Commission approval of a First Nation law, and the second time the Court has upheld the approval and confirmed First Nation law-making jurisdiction and the role of the Commission in that process.

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