Vol. 135, No. 38 — September 22, 2001

Property Assessment and Taxation (Railway Right-of-Way) Regulations

Statutory Authority

Indian Act

Sponsoring Department

Department of Indian Affairs and Northern Development

REGULATORY IMPACT ANALYSIS STATEMENT

Description

Purpose

The Canadian Pacific Railway (CPR) and the Matsqui, Seabird Island, Boothroyd, Cook's Ferry and Skuppah First Nations (the five First Nations) have negotiated an out-of-court settlement resolving long-standing litigation regarding the taxation of railway rights-of-way on reserve in the Fraser Valley of British Columbia. The settlement agreement addresses the concerns raised by CPR and the five First Nations and opens the way to uncontested First Nations' property taxation of CPR railway right-of-way interests.

The foundation of the settlement agreement is the determination that the subject rights-of-way are an interest in land in the reserves and subject to the five First Nations' property taxation jurisdiction. It also provides certainty with respect to the determination of assessed values for right-of-way interests held by CPR and utility licensees and the setting of initial and future tax rates by the five First Nations on real property interests in the right-of-way areas. This is achieved through regulation, under subsection 83(5) of the Indian Act.

Background

The Litigation

CPR and the five First Nations have been in litigation (cited as CPR v. Matsqui) regarding the taxation of railway rights-of-way in the Fraser Valley since 1995. The lands and rights-of-way involved in CPR v. Matsqui were former reserve lands expropriated by the railway and conveyed to CPR under the Indian Act and the Canadian Pacific Railway Act by the federal government. The rail line is the CPR main line through the Fraser Valley.

Under section 83 of the Indian Act, a Band Council may, with the approval of the Minister, make by-laws for the taxation for local purposes of land, or interests in land, in a reserve. Between 1991 and 1993, under First Nation by-laws enacted pursuant to section 83 of the Indian Act, the five First Nations cited above commenced levying property taxes on non-member interests on reserve, including those held by CPR.

In 1995, CPR challenged, in the Federal Court, the validity of First Nation's property tax assessment notices. The court was asked to rule on whether the lands comprising the rights-of-way were section "in the reserve" within the meaning of section 83 of the Indian Act and if so, whether the tax exemption accorded Band members in those by-laws constituted unauthorized discrimination rendering the taxation by-laws invalid.

CPR's legal position has been that the rights-of-way did not fall within the taxing authority of the Bands because the lands were no longer reserve lands but were owned by the railways in fee simple. The five First Nations' legal position has been that the railways held the land under a limited easement and as a result, the lands remained in the reserve and were subject to their taxation authority.

In July 1996, the Federal Court Trial Division found that the rights-of-way were not reserve lands and were not subject to Band taxation by-laws. However, the court also found the reserve lands were granted specifically for railway purposes and for all intents and purposes, that the rights-of-way would revert to Canada when the railway ceased to use them for railway purposes. The five First Nations appealed the trial decision to the Federal Court of Appeal (FCA).

In the June 1999 FCA decision, two Justices upheld the trial court decision, although for different reasons. The third Justice found for the five First Nations (the appellants) and would have allowed the appeal.

Mr. Justice Marceau concluded that the appeal should be dismissed. He argued that CPR had been granted fee simple title to the railway rights-of-way, free of any First Nation interest. As a result, he held that the First Nations did not have a power of taxation over these lands. Mr. Justice Desjardins concluded that lands comprising the rights-of-way were reserve lands and were subject to the First Nations' taxation by-laws. Nonetheless, Justice Desjardins dismissed the appeal because he found the taxation by-laws to be discriminatory. Mr. Justice Robertson, in a dissenting opinion, concluded that the rights-of-way in question were in the reserve and therefore subject to First Nation's taxation by-laws. He found that CPR had less than a fee simple interest in the rights-of-way. Justice Robertson concluded that CPR's interest was more akin to a statutory easement or licence with respect to the rights-of-way.

In the wake of the mixed and confusing decision of the FCA, CPR and the five First Nations engaged in discussions with a view to avoiding further litigation and reaching an agreement that would define the rights-of-way concerned as being an interest in land in the reserve and subject to the First Nations' property taxation jurisdiction, while CPR would gain a defined interest in the rights-of-way for its exclusive use.

In the course of this dispute and negotiations of a settlement, CPR and the five First Nations sought and received extension of time by the Supreme Court of Canada on three separate occasions. A further extension for filling an application for leave to appeal in the CPR v. Matsqui decision was granted by the SCC to November 30, 2001. Should the settlement agreement or the accompanying regulatory initiative fail, the five First Nations will seek to appeal and a decision will then need to be taken by Canada as to whether it should intervene in the matter before the SCC.

The Settlement Agreement

Although not a party to CPR v. Matsqui, Canada was contacted by CPR and the five First Nations in August 2000, as a necessary party for the implementation of any settlement agreement. On February 15, 2001, a negotiated agreement-in-principle was reached among Canada, CPR and the five First Nations to resolve CPR v. Matsqui. Negotiations were finalized in May 2001. The Department of Indian Affairs and Northern Development was involved in the negotiation of the settlement agreement because of its responsibilities for the management of the reserve interests under the Indian Act.

Under the terms of the settlement agreement, the five First Nations, by designation vote, would formally approve the settlement agreement. CPR would convey all its rights title and interest in the right-of-way areas to Canada. Canada would confirm, by Order in Council, the return of the land to reserve status under the Indian Act. This setting aside of the land as reserve will be without prejudice to the position held by the First Nations on the status of the right-of-way lands. Canada would establish taxation regulations setting out the provisions to be adopted by the five First Nations for the valuation of CPR property rights and the determination of annual tax rates. Canada would then issue a taxable easement back to CPR under subsection 16(2) of the Federal Real Property Act. These provisions would thereby bring an end to the CPR-First Nation's litigation.

A cash settlement by CPR will be made to each of the five First Nations, which will also benefit from revenue from any new CPR utility licencee, such as fibre optic companies. The five First Nations will not seek back taxes from the municipalities nor seek any form of redress from Canada.

The settlement agreement is specific to the current parties and will have no direct application to other First Nation/railway taxation issues or practice within British Columbia or any other provincial jurisdiction.

The Regulations

The proposed Governor in Council regulations, made under subsection 83(5) of the Indian Act, would govern the determination of assessed values, initial tax rates and future tax rates on the assessed value of real property interests held by CPR and utility licensees in the right-of-way area. The tax rates would be harmonized with those applying to CPR off reserve under provincial regulations.

The Regulations will provide CPR with the certainty and predictability required to operate in the competitive environment of today's transportation sector. CPR has confirmed that there will be no agreement without the regulated tax provision under subsection 83(5) of the Indian Act. At the same time, CPR is not seeking from Canada any costs or compensation.

Alternatives

These Regulations are a necessary component to the implementation of the settlement agreement and are limited in their application to the property taxation provisions to be adopted by the five First Nations.

The only possible alternative that can be considered is the status quo, whereby CPR would rely on contractual undertakings by the five First Nations, as well as Indian Taxation Advisory Board (ITAB) policy, to maintain agreed property valuation methods and determination of tax rates in line with the settlement agreement and provincial practice.

While the First Nations party to the settlement agreement could easily amend their assessment and rates by-laws to reflect assessment and tax rate setting provisions consistent with those specified in the regulation, no assurance can be made as to the future conduct of First Nations' tax authorities in maintaining these undertakings without having the proposed regulations in place.

Relying on contractual undertaking without a regulatory foundation is not sufficient. The Supreme Court of Canada (SCC), in a recent decision (Pacific National Investments v. City of Victoria), found that a municipal government (subject to the Municipal Act) could not enter into a contractual arrangement which would prevent it from using its decision-making powers to change zoning by-laws and that any agreement to pay damages to compensate for a change in a zoning by-law would also be an unacceptable limitation on the discretion of a municipal council. While First Nations do not operate under the British Columbia provincial Municipal Act, and the by-law powers in question are tax related, this SCC decision would be difficult to ignore for CPR and the five First Nations with respect to the proposed settlement agreement if supporting Regulations are not established.

ITAB policy guidelines reflect the tax harmonization principle. As such, First Nations' tax authorities are encouraged to reflect the same distribution of the property tax burden as evidenced in the rest of the province. Accordingly, the current British Columbia property tax practices define how railway interests are taxed and are regarded as the bench mark for tax harmonization policy considerations, and would therefore direct First Nations' property taxation of railway right-of-way interests on reserve. The proposed Regulations extend these established provisions to First Nations' property taxation regimes.

The settlement agreement and the accompanying Regulations pursuant to subsection 83(5) of the Indian Act are seen by CPR as necessary to ensure that First Nations' tax practices adhere to established British Columbia property tax practices and thus provide CPR with an acceptable level of predictability and certainty. They also ensure that property taxes are paid to the First Nations and not to the province or neighbouring municipality, as is the current practice.

The five First Nations and CPR strongly believe that Canada has an obligation under these circumstances to exercise the legislative powers it has at its disposal to facilitate this settlement agreement. CPR has confirmed that there will be no agreement without the regulated tax provision under subsection 83(5) of the Indian Act.

Benefits and Costs

First Nations

The proposed regulations were urged by the First Nation parties in an attempt to resolve this bitter and long-standing property tax dispute and to gain policy guidance in the appropriate implementation of CPR property taxation. The Regulations will facilitate the implementation of the settlement agreement and the property taxation of CPR interests on First Nation lands.

The exercise of First Nation property taxation jurisdiction over all property interests on reserve is an important element of self-government. The revenue generated (approximately $146,500 annually to all five First Nations) represents much needed investment in local infrastructure development and better local economic development opportunities.

Canadian Pacific Railway (CPR)

Under the terms of the settlement agreement as ensured through the Regulations, CPR will be provided with levels of property taxation that are predictable and comparable to existing levels of property taxation under provincial laws. This will provide CPR with tax fairness and equity relative to its competitors, and assist in maintaining its competitive position relative to other railways and forms of transportation as well as its ongoing economic viability.

This initiative is cost neutral to CPR. Following the implementation of the settlement agreement and enactment of the Regulations, CPR will, in effect, be paying its property taxes to the five First Nations rather than to the province and neighbouring municipalities.

The Province and Neighbouring Municipalities

Currently, the City of Abbotsford (Matsqui) and the District of Kent (Seabird Island) tax CPR, on an annual basis, in the amount of $1,500 and $145,000 respectively. Of these amounts, Abbotsford nets $1,000 and Kent nets $100,000, while the balance is remitted to the province. No services are provided to CPR.

The province and municipalities will forego future tax revenue with the implementation of this agreement and the taxation of CPR by the five First Nations.

It is important to note that the parties view this as a "go forward" agreement, in that CPR will not claim back taxes from the province or municipalities, nor will the five First Nations demand payment from CPR for the foregone taxes since the approval of their taxation by-laws.

Indian Taxation Advisory Board (ITAB)

The development of First Nation property tax regulations applied to the taxable interests of railway companies on reserve will resolve the long-standing CPR-First Nation dispute and will bring a decidedly positive impact on ITAB policy objectives.

The settlement agreement supported by the Regulations will expand First Nation revenue jurisdiction by ensuring that First Nation property taxation jurisdiction is recognized. As such, the five First Nations will raise revenue where none was available before. This will encourage local economic development in that the costs associated with First Nation tax revenue from railway interests are limited as few services, if any, are required. These lower service costs will free tax revenue and maximize the potential for First Nation investments (applied in accordance with expenditure policy) in local economic development initiatives.

This initiative will also promote efficiencies in the five First Nation property tax systems as the Regulations are an administratively efficient approach to property valuation and rate setting that will provide administrative certainty and end potential challenges through the courts. Similarly, the Regulations will protect the integrity of First Nation property tax systems by ensuring that First Nation property taxation operates at the same standard as other governments thereby balancing the interests of the tax authority with those of the tax payer and promoting consistency, fairness and equity.

No incremental administrative cost pressures will result from the implementation of the settlement agreement and the accompanying Regulations.

Canada (Indian and Northern Affairs Canada)

The benefits of the taxation regulations to Indian and Northern Affairs Canada (INAC) are consistent with the policy objectives of ITAB. The taxation regulations harmonize the railway tax regime on reserve with that applying to their neighbours. INAC has facilitated the out-of-court settlement between the First Nations and CPR by its participation and this, in turn, strengthens Canada's partnership relationship with the First Nations. The settlement also serves INAC's objectives under Gathering Strength, Canada's Aboriginal action plan, in strengthening the First Nations' governance capacity by extending their taxation jurisdiction to these railways traversing their reserves. If the agreement and taxation regulations were to fail, the parties are certain to be back before the courts and Canada would be required to consider its position regarding intervention in the action, or being brought into the action as a defendant. This in turn would lead to future uncertain cost implications for INAC, both in the conduct of the litigation and any damages awarded against Canada.

The taxation regulations are cost neutral to INAC. The INAC capital or band support funding to these five First Nations will not be augmented as a result of the creation of a taxable interest by the easement to be issued to CPR, since no services will be provided to CPR by the First Nations. The previous tax recipients, the municipalities of Kent and Abbotsford, also provided no services. There may be minimal costs associated with administration by INAC of the right-of-way agreement to CPR. CPR will also not be seeking from Canada any costs or compensation.

Canadian Society

The agreement will appeal to the fair-mindedness of average Canadians in seeing it as right and proper that this railway corridor, originally expropriated from the First Nations and running through their reserves, now is confirmed as reserve once more, and as a taxable interest that provides much needed revenue to the community. The agreement, to the degree that it is a win-win negotiated settlement for all parties, shows these and other First Nations that the negotiation of long-standing disputes is practical and achievable in a spirit of compromise and goodwill, and supported by the federal government, as opposed to pursuing litigation or other courses that First Nations may choose. Canada, as a whole, benefits because CPR, as a rail company of national importance to the country, achieves commercial certainty through this settlement and tax regulations. The right-of-way is part of CPR's main rail corridor via the Fraser River valley and its continued commercial viability is significant to British Columbia's and Canada's economic health derived from the efficient movement of goods by rail through the Rockies.

Environmental Impact

As a condition of the proposed settlement agreement, CPR will undertake an environmental site assessment of the right-of-way, to the satisfaction of Canada. The site assessment will identify the existing condition of the land, any environmental concerns, contamination, and the environmental mitigation and protection measures to be implemented by CPR at present or in future, in accordance with general railway industry practice. The standards for acceptable site conditions to be used in the environmental site assessment and in determining the appropriate environmental mitigation and protection measures will be those of the Canadian Council of the Ministers of the Environment, when applicable. In other cases the applicable federal or provincial standards will be used.

When the right-of-way ceases to be used for railway purposes, the land should be restored to be suitable for commercial or industrial use, utilizing the guidelines of the Canadian Council of the Ministers of the Environment for contaminated sites, or such standards, guidelines or regulations or statutes in effect at that time and applicable to the restoration of abandoned railway rights-of-way.

There is no requirement for an environmental assessment for the granting of the right-of-way, under the Canadian Environmental Assessment Act (CEAA). Subsection 74(4) of the CEAA provides for grandfathering of any works initiated before June 22, 1984; as a result the CEAA does not apply with respect to any licensing, permission or approval under provision of the Act. CPR will continue to use the right-of-way corridor for railway purposes.

Under the terms of the settlement agreement, the right-of-way will be used for fibre optic cable networks and other utilities (which are defined in the agreement to include pipeline, cable, power, water, sewer and gas). The right-of-way will continue for as long as it is used for CPR business (which includes railway purposes, fibre optic cable networks and other utilities).

Regulatory Burden

The Regulations are straightforward in their application and impose minimal requirements on First Nation property tax authorities. The Regulations are limited in their application to the concerned five First Nations. The property tax provisions established in the Regulations are identical to well established provincial practice and thus no regulatory conflict can arise.

Consultation

The purpose of the consultation process with respect to the Province of British Columbia and to the two municipalities is to formally advise them of the settlement agreement and of the intention to proceed with First Nation taxation of the CPR rights-of-way.

In accordance with British Columbia's Indian Self Government Enabling Act, when the Minister of Indian Affairs and Northern Development approves a First Nation property taxation by-law, all municipal and provincial property taxation on reserve ceases. As well, each First Nation is issued a certificate which gives notice of their intention to collect property tax. The notice is sent to each municipality affected and is published in the provincial Gazette. This procedure was followed by each of the five First Nations between 1991 and 1993 as they initiated their property taxation regimes. As a federal condition to finalizing a settlement, the five First Nations and CPR (facilitated by ITAB) will meet with the two municipalities and advise them of the proposed settlement agreement and CPR's change in status as a municipal property tax payer.

The City of Abbotsford and the District of Kent were advised, in writing, of the settlement agreement. Each was provided with a copy of the agreement and each was contacted directly by CPR.

There are 13 other taxing First Nations within British Columbia with CPR interests on reserve. They were notified of the agreement, in writing, on July 10, 2001. Although they will not be affected by the settlement agreement, but have an interest in what has been negotiated, the purpose of the consultation with them is for information purposes, to advise them of the settlement agreement and to respond to any questions they may have. All remaining taxing First Nations will be advised through the ITAB newsletter, Clearing the Path. ITAB will also convene an information meeting with taxing First Nations to discuss the agreement.

Compliance and Enforcement

Indian Taxation Advisory Board (ITAB)

ITAB has a mandate to examine tax rate by-laws drafted by First Nations under section 83 of the Indian Act. ITAB recommends tax by-laws for approval by the Minister of Indian Affairs and Northern Development. ITAB may also examine opportunities to introduce regulations relating to matters set out in section 83 of the Indian Act.

In order to ensure compliance with the proposed Regulations, the assessment and rates by-laws of First Nations party to the settlement agreement must conform with the property assessment, valuation and tax rate provisions set out in the Regulations.

The revenue that can be generated from property taxation depends directly on the two main components of a property tax: the tax base (assessed value of real property interests on reserve) and the tax rate. The rate of taxation is applied to the assessed value of real property to arrive at the amount of tax levied.

The authority for First Nations' governments to collect monies from tax payers is through an approved rates by-law. The rates by-law determines the rate at which each class of property on reserve is to be taxed. In order for a First Nations' property taxation regime to be valid, enforceable and recognized by the courts, a rates by-law must be enacted annually and approved by the Minister.

ITAB policy with respect to the establishment of rates is based on the need to recognize a balance between First Nations' and tax payers' rights. The challenge facing ITAB is to ensure that tax payers are treated with fairness, justice and equity, while First Nations' governments, as taxing authorities, are free to assert their jurisdiction. All rates by-laws are reviewed to ensure that they:

— comply with all provisions of the Indian Act;

— conform to the Canadian Charter of Rights and Freedoms; and

— support the principles of natural justice.

To ensure the smooth transition to First Nations' taxation, ITAB has always sought to embrace the principle of tax harmonization with surrounding jurisdictions and has encouraged and supported provincial enabling legislation to do so (Indian Self Government Enabling Act in British Columbia and An Act to establish an administrative review procedure for real estate assessment and to amend other legislative provisions in Quebec).

The ITAB rates policy evaluation criteria respect the principle of tax harmonization as an expression of fairness, justice and equity. First Nations' rates by-laws establishing tax rates to be applied to railway interests would therefore be reviewed to reflect these principles.

First Nations' assessment by-laws set out the types of taxable properties that are to be assessed and the general manner in which the assessments are to be carried out.

ITAB reviews the initial First Nations' assessment by-laws and subsequent amendments and makes recommendations on their approval to the Minister. Therefore, as with tax rate by-laws, First Nations' assessment by-law provisions for the valuation of railway interests would be reviewed against current British Columbia assessment practice.

ITAB's review and recommendation for ministerial approval of amended assessment by-laws and annual rates by-laws would be based on the governing provisions established in the Regulations. ITAB will not recommend for ministerial approval any First Nations' assessment or annual rates by-law that attempts to introduce any provision beyond that allowed in the Regulations. Without a duly approved rates by-law, First Nations cannot legally impose a property tax.

The Regulations will support the Minister's decision-making powers in approving First Nations' by-laws to ensure that property tax revenues from CPR are paid to First Nations and not to the province or a neighbouring municipal jurisdiction.

This regulatory initiative is a tangible demonstration of the policy intent of subsection 83(5) respecting the exercise of the by-law making powers of First Nations.

Contact

Brent Moreau, Director of Intergovernmental Affairs, Indian Taxation Advisory Board, 90 Elgin Street, 2nd Floor, Ottawa, Ontario K1A 0H4, (613) 954-6764; or Rick Simison, Manager, Land Research Group, Lands Directorate, Lands and Trust Services, Indian and Northern Affairs Canada, 10 Wellington Street, Hull, Quebec K1A 0H4, (819) 994-3333.

PROPOSED REGULATORY TEXT

Notice is hereby given that the Governor in Council, pursuant to section 83(5) of the Indian Act (see footnote a), proposes to make the annexed Property Assessment and Taxation (Railway Right-of-Way) Regulations.

Interested persons may make representations with respect to the proposed Regulations within 15 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Richard Simison, Department of Indian Affairs and Northern Development, Room 1722A, Les Terrasses de la Chaudière, 10 Wellington Street, Hull, Quebec, K1A 0H4 and Brent Moreau, Indian Taxation Advisory Board, 90 Elgin Street, 2nd Floor, Ottawa, Ontario, K1A 0H4.

Ottawa, September 20, 2001

RENNIE M. MARCOUX
Acting Assistant Clerk of the Privy Council

definitions	PROPERTY ASSESSMENT AND TAXATION (RAILWAY RIGHT-OF-WAY) REGULATIONS
	INTERPRETATION
Definitions	1. The following definitions apply in these Regulations.
"Act" « Loi »	"Act" means the Indian Act.
"adjacent area" « zone adjacente »	"adjacent area", in respect of a First Nation, means the incorporated or unincorporated area bordering a majority of those reserves of the First Nation that contain right-of-way areas.
"adjustment factor" « facteur de rajustement »	"adjustment factor" means the adjustment factor set out in the Adjustment Factors Relating to the Valuation of Railway Corporation Property Regulation, B.C. Reg. 324/96, as amended from time to time.
"band council" « conseil de bande »	"band council" means the council of a First Nation.
"by-law" « règlement administratif »	"by-law" means a by-law made under subsection 83(1) of the Act.
"Canadian Pacific Railway Company" « Compagnie de chemin de fer Canadien Pacifique »	"Canadian Pacific Railway Company" includes any successor to the Canadian Pacific Railway Company.
"fibre optic improvements" « équipement de fibres optiques »	"fibre optic improvements" means fibre optic fibres, sheaths, wrapping, conduits, cables and other related improvements.
"First Nation" « première nation »	"First Nation" means an Indian band set out in column 1 of Schedule 1.
"incorporated area" « zone constituée »	"incorporated area" means an area incorporated as a municipality under the Local Government Act of British Columbia.
"property" « propriété »	"property" means a right-of-way, any other right or interest in lands, or improvements.
"provincial taxation laws" « lois fiscales provinciales »	"provincial taxation laws" means the laws and regulations of the Province of British Columbia respecting property taxation, including the Assessment Act, the Adjustment Factors Relating to the Valuation of Railway Corporation Property Regulation, the Hospital District Act, the School Act, the Local Government Act and the Taxation (Rural Area) Act, as amended from time to time.
"right-of-way area" « zone d'emprise »	"right-of-way area", in respect of a First Nation set out in column 1 of Schedule 1, means the lands described in column 2.
"track in place" « voie ferrée existante »	"track in place" has the same meaning as "track in place of a railway corporation" in subsection 21(15) of the Assessment Act of British Columbia.
	APPLICATION
Application	2. These Regulations apply to by-laws made by a band council in respect of taxation of property in a right-of-way area.
	TAXATION BY-LAWS
Indian Taxation Advisory Board review	3. A band council shall refer a draft of each by-law proposed to be made in respect of taxation of property in a right-of-way area to the Indian Taxation Advisory Board for review and recommendations prior to making the by-law.
Determination of assessable value	4. (1) Subject to subsection (2), a by-law in respect of taxation of property in a right-of-way area shall provide that an assessor must determine the assessable value of the following types of property using the assessment rates, adjustments, exceptions, inclusions and exclusions that would be applied if the property were subject to provincial taxation laws: (a) track in place of a railway company, including fibre optic improvements; (b) rights-of-way for track referred to in paragraph (a); (c) bridges of a railway company; (d) fibre optic improvements of a non-railway company; (e) utility systems of a non-railway company, including pipeline, cable, telephone, power, sewer, gas and related facilities; and (f) other improvements lawfully located in a right-of-way area.
Adjustment factors	(2) Adjustment factors do not apply to the determination of assessable values of property under a by-law.
Maximum tax rates for railway companies	5. (1) Subject to subsection (3), the tax rate for a taxation year established under a by-law enacted by a First Nation set out in column 1 of Schedule 2 in respect of property of a railway company in a right-of-way area shall not exceed the rate equal to the sum of the products, determined for each of the tax bases set out in column 2, of A × B where A is the tax rate established for that taxation year under provincial taxation laws for that tax base; and B is the adjustment factor for that tax base.
Maximum tax rates for non-railway companies	(2) Subject to subsection (3), the tax rate for a taxation year established under a by-law enacted by a First Nation set out in column 1 of Schedule 2 in respect of improvements of a company other than a railway company in a right-of-way area shall not exceed the rate equal to the sum of the tax rates, established for that taxation year under provincial taxation laws, for the tax bases set out in column 2.
Exemptions and inclusions	(3) A tax rate referred to in subsection (1) or (2) shall incorporate the same exemptions, exceptions, inclusions and exclusions that would be applicable to the property if the property were subject to the provincial taxation laws applicable to the adjacent area.
Adjustment factors	(4) For the purposes of subsection (1), the adjustment factors applicable to the determination of tax rates shall be (a) in respect of the Matsqui Indian Band, Boothroyd Indian Band, Cook's Ferry Indian Band and Skuppah Indian Band, the adjustment factors that apply to property in incorporated areas; and (b) in respect of the Seabird Island Indian Band, the adjustment factors that apply in the District of Kent.
	COMING INTO FORCE
Coming into force date	6. These Regulations come into force on the day on which they are registered.

SCHEDULE 1
(Section 1)

RIGHT-OF-WAY AREAS

Item	Column 1 First Nation	Column 2 Description of Right-of-way Area
1.	Boothroyd Indian Band	(a) In the Province of British Columbia In Yale Division of Yale District In Speyum Indian Reserve No. 3 Firstly, all those lands shown as Parcel 1 on a Registration Plan of Railway Right of Way Area prepared by Mr. D.G. Fenning C.L.S., B.C.L.S. in May 2001 and recorded in the Canada Lands Surveys Records in Ottawa under number RSBC 3325R. Containing an area of 32.0 hectares more or less, save and except all mines and minerals, whether precious or base, solid, liquid or gaseous. Secondly, all those lands shown as Parcel 2, being the travelled portion of the Chaumox Road within the Railway Right of Way Area as shown on the plan prepared by Mr. D.G. Fenning C.L.S., B.C.L.S. in May 2001 and recorded in the Canada Lands Surveys Records in Ottawa under number RSBC 3325R. Containing an area of 1.75 hectares more or less, save and except all mines and minerals, whether precious or base, solid, liquid or gaseous.
		(b) In the Province of British Columbia In Yale Division of Yale District In Chukcheetso Indian Reserve No.7 All those lands shown on a Registration Plan of Railway Right of Way Area, including the roads within that Railway Right of Way, as shown on a plan prepared by Mr. D.G. Fenning C.L.S., B.C.L.S. in May 2001 and recorded in the Canada Lands Surveys Records in Ottawa under number RSBC 3315R. Containing 11.11 hectares more or less, save and except all mines and minerals, whether precious or base, solid, liquid or gaseous.
2.	Cook's Ferry Indian Band	(a) In the Province of British Columbia In Yale Division of Yale District In Kumcheen Indian Reserve No. 1 All those lands shown on a Registration Plan of Railway Right of Way Area prepared by Mr. D.G. Fenning C.L.S., B.C.L.S. in May 2001 and recorded in the Canada Lands Surveys Records in Ottawa under number RSBC 3312R. Containing 2.22 hectares more or less, save and except all mines and minerals, whether precious or base, solid, liquid or gaseous.
		(b) In the Province of British Columbia In Yale Division of Yale District In Spences Bridge Indian Reserve No. 4 All those lands shown on a Registration Plan of Railway Right of Way Area prepared by Mr. Edward Eaton C.L.S., B.C.L.S. in May 2001 and recorded in the Canada Lands Surveys Records in Ottawa under number RSBC 3322R. Containing 0.45 hectares more or less, save and except all mines and minerals, whether precious or base, solid, liquid or gaseous.
		(c) In the Province of British Columbia In Yale Division of Yale District In Lower Shawniken Indian Reserve No. 4A All those lands shown on a Registration Plan of Railway Right of Way Area prepared by Mr. Edward Eaton C.L.S., B.C.L.S. in May 2001 and recorded in the Canada Lands Surveys Records in Ottawa under number RSBC 3321R. Containing 11.9 hectares more or less, save and except all mines and minerals, whether precious or base, solid, liquid or gaseous.
		(d) In the Province of British Columbia In Yale Division of Yale District In Pemynoos Indian Reserve No. 9 All those lands shown on a Registration Plan of Railway Right of Way Area prepared by Mr. Edward Eaton C.L.S., B.C.L.S. in May 2001 and recorded in the Canada Lands Surveys Records in Ottawa under number RSBC 3320R. Containing 51 hectares more or less, save and except all mines and minerals, whether precious or base, solid, liquid or gaseous.
		(e) In the Province of British Columbia In Yale Division of Yale District In Pokheitsk Indian Reserve No. 10 All those lands shown on a Registration Plan of Railway Right of Way Area prepared by Mr. Edward Eaton C.L.S., B.C.L.S. in May 2001 and recorded in the Canada Lands Surveys Records in Ottawa under number RSBC 3319R. Containing 4.48 hectares more or less, save and except all mines and minerals, whether precious or base, solid, liquid or gaseous.
		(f) In the Province of British Columbia In Yale Division of Yale District In Spatsum Indian Reserve No. 11 All those lands shown on a Registration Plan of Railway Right of Way Area prepared by Mr. Edward Eaton C.L.S., B.C.L.S. in May 2001 and recorded in the Canada Lands Surveys Records in Ottawa under number RSBC 3317R. Containing 4.92 hectares more or less, save and except all mines and minerals, whether precious or base, solid, liquid or gaseous.
		(g) In the Province of British Columbia In Yale Division of Yale District In Spatsum Indian Reserve No. 11A All those lands shown on a Registration Plan of Railway Right of Way Area prepared by Mr. Edward Eaton C.L.S., B.C.L.S. in May 2001 and recorded in the Canada Lands Surveys Records in Ottawa under number RSBC 3318R. Containing 9.18 hectares more or less, save and except all mines and minerals, whether precious or base, solid, liquid or gaseous.
3.	Matsqui Indian Band	In the Province of British Columbia In New Westminster District In Sahhacum Indian Reserve No. 1 All those lands shown on a Registration Plan of Railway Right of Way Area prepared by Mr. D.G. Fenning C.L.S., B.C.L.S. in May 2001 and recorded in the Canada Lands Surveys Records in Ottawa under number RSBC 3313R. Containing 2.62 acres (1.06 hectares) more or less, save and except all mines and minerals, whether precious or base, solid, liquid or gaseous.
4.	Seabird Island Indian Band	In the Province of British Columbia In the Yale Division of Yale District In Seabird Island Indian Reserve All those lands shown as Lot 258 on a Registration Plan of Railway Right of Way Area prepared by Mr. D. George Fenning C.L.S., B.C.L.S. in May 2001 and recorded in the Canada Lands Surveys Records in Ottawa under number RSBC 3316R. Containing 25.6 hectares more or less, save and except all mines and minerals, whether precious or base, solid, liquid or gaseous.
5.	Skuppah Indian Band	(a) In the Province of British Columbia In Yale Division of Yale District In Inklyuhkinatko Indian Reserve No. 2 All those lands shown on a Registration Plan of Railway Right of Way Area prepared by Mr. D.G. Fenning C.L.S., B.C.L.S. in May 2001 and recorded in the Canada Lands Surveys Records in Ottawa under number RSBC 3323R. Containing 22.0 hectares more or less, save and except all mines and minerals, whether precious or base, solid, liquid or gaseous.
		(b) In the Province of British Columbia In Yale Division of Yale District In Skuppah Indian Reserve No. 2A All those lands shown on a Registration Plan of Railway Right of Way Area prepared by Mr. D.G. Fenning C.L.S., B.C.L.S. in May 2001 and recorded in the Canada Lands Surveys Records in Ottawa under number RSBC 3324R. Containing 4.74 hectares more or less, save and except all mines and minerals, whether precious or base, solid, liquid or gaseous.
		(c) In the Province of British Columbia In Yale Division of Yale District In Skuppah Indian Reserve No. 4 All those lands shown on a Registration Plan of Railway Right of Way Area prepared by Mr. D.G. Fenning C.L.S., B.C.L.S. in May 2001 and recorded in the Canada Lands Surveys Records in Ottawa under number RSBC 3314R. Containing 7.17 hectares more or less, save and except all mines and minerals, whether precious or base, solid, liquid or gaseous.

SCHEDULE 2
(Section 5)

DETERMINATION OF FIRST NATIONS' TAX RATES FOR COMPANIES WITH
CLASS 2 PROPERTY IN RIGHT-OF-WAY AREAS

Item	Column 1 First Nation	Column 2 Tax Base for Adjacent Area
1.	Boothroyd Indian Band	(i) Basic School
		(ii) Provincial Rural
		(iii) Fraser Valley Hospital
		(iv) Area "A" Fraser Valley Regional District
		(v) B.C. Assessment
		(vi) Municipal Finance Authority
2.	Cook's Ferry Indian Band	(i) Basic School
		(ii) Provincial Rural
		(iii) Thompson Hospital
		(iv) Thompson-Nicola Hospital
		(v) Area "I" Thompson-Nicola Regional District
		(vi) B.C. Assessment
		(vii) Municipal Finance Authority
3.	Matsqui Indian Band	(i) Basic School
		(ii) City of Abbotsford General Municipal Purpose
		(iii) City of Abbotsford Specified Area
		(iv) Fraser Valley Regional District
		(v) Fraser Valley Regional Hospital
		(vi) Fraser Valley Regional Library
		(vii) B.C. Assessment
		(viii) Municipal Finance Authority
4.	Seabird Island Indian Band	(i) Basic School
		(ii) District of Kent General Municipal Purpose
		(iii) Fraser-Cheam Regional District
		(iv) Fraser-Cheam Regional Hospital
		(v) B.C. Assessment
		(vi) Municipal Finance Authority
5.	Skuppah Indian Band	(i) Basic School
		(ii) Provincial Rural
		(iii) Thompson Hospital
		(iv) Thompson-Nicola Hospital
		(v) Area "I" Thompson-Nicola Regional District
		(vi) TV Rebroadcast
		(vii) B.C. Assessment
		(viii) Municipal Finance Authority
		[38-1-o]

Footnote a

R.S., c. 17 (4th Supp.), s. 10(3)

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