Tag: Tribal Law

FinCEN Publishes Updated FAQs

Entities terminated in 2024 are required to file Corporate Transparency Act beneficial ownership information reports, as are administratively dissolved entities.

The Financial Crimes Enforcement Network (“FinCEN”) recently published updates to its list of Frequently Asked Questions (“FAQs”) to assist entities in complying with the beneficial ownership reporting requirements of the Corporate Transparency Act (“CTA”).

Principal among these updates was FinCEN’s clarifying requirement that business entities terminated in the year 2024 (whether existing prior to 2024 or formed in 2024) are required to file beneficial ownership information reports (BOIR) under the CTA.

This filing requirement also expressly includes BOIR filings for administratively dissolved entities.

Each of these concepts were the subject of debate as to their applicability under the CTA prior to this FAQ release, with some conjecture that terminating an entity’s existence prior to its BOIR filing deadline would alleviate the need to make a BOIR filing – a position now refuted by FinCEN.

As Polsinelli has consistently advised, the obligation to file under the CTA has accrued for all entities in existence in 2024, only the deadline for filing the BOIR has not yet arrived. Entities are advised to file their BOIR prior to consummating their termination process.

The July 8 FAQs also included clarification on beneficial owner disclosure scenarios involving an entity fully or partially owned by an Indian Tribe.

FinCEN expects to publish further guidance in the future. The updated FAQs can be accessed here.

* * * * *

Several of the updates bear special note:

1. FAQ C. 12. – Reporting Company Status

Do beneficial ownership information reporting requirements apply to companies created or registered before the Corporate Transparency Act was enacted (January 1, 2021)?

FinCEN stated “Yes.” Beneficial ownership information reporting requirements apply to all companies that qualify as “reporting companies”, regardless of when they were created or registered. Companies are not required to report beneficial ownership information to FinCEN if they are exempt or ceased to exist (i.e., are formally terminated with the Secretary of State) as legal entities before January 1, 2024.

2. FAQ C. 13. – Reporting Company Status

Is a company required to report its beneficial ownership information to FinCEN if the company ceased to exist before reporting requirements went into effect on January 1, 2024?

A company is not required to report its beneficial ownership information to FinCEN if it ceased to exist as a legal entity (i.e., was formally terminated with the Secretary of State) before January 1, 2024. This means that the entity entirely completed the process of formally and irrevocably dissolving (i.e., was formally terminated with the Secretary of State). A company that ceased to exist as a legal entity before the beneficial ownership information reporting requirements became effective January 1, 2024, was never subject to the reporting requirements and thus is not required to report its beneficial ownership information to FinCEN.

Although state or Tribal law may vary, a company typically completes the process of formally and irrevocably dissolving by, for example, filing dissolution paperwork with its jurisdiction of creation or registration, receiving written confirmation of dissolution, paying related taxes or fees, ceasing to conduct any business, and winding up its affairs (e.g., fully liquidating itself and closing all bank accounts).

If a reporting company continued to exist as a legal entity for any period of time on or after January 1, 2024 (i.e., did not entirely complete the process of formally and irrevocably dissolving (i.e., terminating) before January 1, 2024), then it is required to report its beneficial ownership information to FinCEN, even if the company had wound up its affairs and ceased conducting business before January 1, 2024.

Similarly, if a reporting company was created or registered on or after January 1, 2024, and subsequently ceased to exist, then it is required to report its beneficial ownership information to FinCEN—even if it ceased to exist before its initial beneficial ownership information report was due.

A company that is administratively dissolved or suspended—because, for example, it failed to pay a filing fee or comply with certain jurisdictional requirements—generally does not cease to exist as a legal entity unless the dissolution or suspension becomes permanent. Until the dissolution becomes permanent, such a company is required to report its beneficial ownership information to FinCEN.

3. FAQ C. 14. – Reporting Company Status

If a reporting company created or registered in 2024 or later winds up its affairs and ceases to exist before its initial BOI report is due to FinCEN, is the company still required to submit that initial report?

FinCEN stated “Yes.” Reporting companies created or registered in 2024 must report their beneficial ownership information to FinCEN within 90 days of receiving actual or public notice of creation or registration. Reporting companies created or registered in 2025 or later must report their beneficial ownership information to FinCEN within 30 days of receiving actual or public notice of creation or registration. These obligations remain applicable to reporting companies that cease to exist as legal entities—meaning wound up their affairs, ceased conducting business, and entirely completed the process of formally and irrevocably dissolving—before their initial beneficial ownership reports are due.

It bears note that, if a reporting company files an initial beneficial ownership information report and then ceases to exist, then there is no requirement for the reporting company to file an additional report with FinCEN noting that the company has ceased to exist.

4. FAQ D. 17. – Beneficial Owner

Who should an entity fully or partially owned by an Indian Tribe report as its beneficial owner(s)?

An Indian Tribe is not an individual, and thus should not be reported as an entity’s beneficial owner, even if it exercises substantial control over an entity or owns or controls 25 percent or more of the entity’s ownership interests. However, entities in which Tribes have ownership interests may still have to report one or more individuals as beneficial owners in certain circumstances.

Entity Is a Tribal Governmental Authority. An entity is not a reporting company—and thus does not need to report beneficial ownership information at all—if it is a “governmental authority,” meaning an entity that is (1) established under the laws of the United States, an Indian Tribe, a State, or a political subdivision of a State, or under an interstate compact between two or more States, and that (2) exercises governmental authority on behalf of the United States or any such Indian Tribe, State, or political subdivision. This category includes tribally chartered corporations and state-chartered Tribal entities if those corporations or entities exercise governmental authority on a Tribe’s behalf.

Entity’s Ownership Interests Are Controlled or Wholly Owned by a Tribal Governmental Authority. A subsidiary of a Tribal governmental authority is likewise exempt from BOI reporting requirements if its ownership interests are entirely controlled or wholly owned by the Tribal governmental authority.

Entity Is Partially Owned by a Tribe (and Is Not Exempt). A non-exempt entity partially owned by an Indian Tribe should report as beneficial owners all individuals exercising substantial control over it, including individuals who are exercising substantial control on behalf of an Indian Tribe or its governmental authority. The entity should also report any individuals who directly or indirectly own or control at least 25 percent or more of the ownership interests of the reporting company. (However, if any of these individuals own or control these ownership interests exclusively through an exempt entity or a combination of exempt entities, then the reporting company may report the name(s) of the exempt entity or entities in lieu of the individual beneficial owner.)

© Polsinelli PC, Polsinelli LLP in California

The Inflation Reduction Act: How Do Tribal Communities Benefit?

On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (“IRA”), ushering in substantial changes for tax law, climate resilience, healthcare, and more in the United States. According to the Biden administration’s press release, the new $750 billion legislation aims to lower everyday costs for families, insist that corporations pay their fair share, and combat the climate crisis. During the signing ceremony, President Biden stated, “With this law, the American people won and the special interests lost […] For a while people doubted whether any of that was going to happen, but we are in a season of substance.”

Notably, the legislation provides significant provisions for tribal communities and the Bureau of Indian Affairs. Once the funding is appropriated by Congress, it will be directed toward drought mitigation programs, fish hatcheries, modernization of electric systems, and more for Native communities, including ones in Alaska and Hawaii.

How the Inflation Reduction Act of 2022 Supports the Environment and Tribal Communities

The Inflation Reduction Act of 2022 contains an array of provisions, including the reduction of drug prices, the lowering of energy costs, and, notably, federal infrastructure investments that benefit Native communities. Andrew M. VanderJack and Laura Jones, Co-Coordinators of Van Ness Feldman’s Native Affairs Practice, highlight the most significant facets of the bill: “This legislation provides some opportunities specifically for tribes and tribal entities, including programs related to climate resiliency and adaptation, electrification, and drought relief. For example, the Emergency Drought Relief program for Tribes extends direct financial assistance to tribal governments to address drinking water shortages and to mitigate the loss of tribal trust resources.”

Pilar Thomas, Partner in Quarles & Brady’s Energy, Environment & Natural Resources Practice Group, expanded on the most significant inclusions for Tribes: “[…] the creation of a Direct Pay tax credit payment program that allows Tribes to receive a payment equal to the clean energy technology tax credits – especially for solar, wind, storage, geothermal and EV charging stations; […] direct funding for electrification and climate resiliency through DOI and USDA; […] access to the greenhouse gas reduction fund, environmental and climate justice grants; and expanded energy efficiency tax benefits and rebates for tribes and tribal members.”

“Tribal governments are also eligible to apply for other programs such as the Clean Vehicle Credit program, the Energy Efficient Commercial Buildings Deduction, and the State and Private Forestry Conservation Programs,” noted Mr. VanderJack and Ms. Jones.

How the 2022 Inflation Reduction Act Has Been Received by Tribal Communities

The 2022 Inflation Reduction Act has received a warm reception from groups such as the National Indian Health Board and Native Organizers Alliance, who laud the bill’s potential to improve environmental, medical, and economic conditions for tribal communities, some of whom still lack access to electricity or clean water. The increase in funding will allow tribes to use green energy technology to increase climate resilience and decrease individual energy costs, while reducing the effects of environmental racism with risk assessments for drinking water and climate hazards. These infrastructural changes will stimulate economic development by creating new jobs. “With critical investments in the Inflation Reduction Act, we’re making sure the federal government steps up to support Native-driven climate resilience, advance tribal energy development, and fulfill its trust responsibility to Native communities,” said Senator and Senate Committee on Indian Affairs Chairman Brian Schatz.

“This legislation will result in hundreds of millions of funding available for Tribes, and non-profits that work with tribes and tribal communities to support the clean energy transition for tribal communities, reduce energy costs for tribal members, and create jobs,” said Ms. Thomas of Quarles & Brady. “The IRA will provide a substantial down payment for every tribe to take advantage of clean energy technologies, energy efficiency and energy savings, and climate resilient solutions for their communities and tribal members individually.  The new projects, technology implementation and economic development opportunities are substantial and will create long term community and economic development sustainable improvements in tribal communities.”

Some groups feel that the new legislation does not go far enough. In an open letter to President Biden, Senate Majority Leader Chuck Schumer, and House Speaker Nancy Pelosi, Indigenous-led advocacy organization NDN Collective argued that Congress’ hesitance to fully reject fossil fuels undermines the stated goals of addressing climate change, a misstep that could disproportionately affect tribal communities at the frontlines of the environmental crisis. “We believe that moving away from investments in the fossil fuel and other extractive industries and reallocating the funding to further research and development will help us find the solutions we need for true decarbonization and large-scale equitable carbon emissions reductions,” the collective stated. “We are already aware of innovative, Indigenous-led solutions that just need the proper funding and support to be scaled and replicated.”

Challenges in Getting the 2022 Inflation Reduction Act Passed

Up to this point, the Inflation Reduction Act has faced significant challenges in Congress. The legislation is the product of extensive compromise over the Build Back Better Act within the Democratic party. The Build Back Better Bill was initially estimated to cost over $3 trillion, and ultimately, the Inflation Reduction Act was passed with a budget of $750 billion. Senator Joe Manchin of West Virginia held back his support of the bill until late July, and Republicans successfully blocked an aspect of the bill that would have capped the price of insulin for Americans with private health insurance. When presented to Congress, the vote was split by party lines with every Republican voting against the bill. Biden has criticized Republicans for this decision, saying at the signing of the Inflation Reduction Act, “every single Republican in the Congress sided with the special interests in this vote — every single one.”

Challenges for tribal governments remain as well, specifically concerning the IRA’s implementation. “Despite the incredible opportunity for tribes, major barriers remain including tribal internal capacity and capabilities, [and] federal regulatory hurdles (such as BIA leasing and easement approvals),” said Ms. Thomas.

“[…] Navigating the complexities of each program and actually obtaining funding is always the challenge,” said Mr. VanderJack and Ms. Jones of Van Ness Feldman. “Tribes and tribal entities should engage directly, whenever possible, with the grant funding agencies to make sure proposals are tailored to fit both program requirements and community needs.”

Early Assessment of How the IRA will Impact Tribal Communities

The Inflation Reduction Act, ultimately, provides meaningful resources and investments for tribal communities in a variety of ways. While the provisions are not as significant as COVID-19 relief and infrastructure funding that tribal governments have received in previous years, the new legislation is nonetheless beneficial. “While the federal grant funding is relatively small, the potential major impact is the ability to access funding through tax credit payments and rebates,” said Ms. Thomas. “This mechanism is critical as it is simplifies tribes’ access to funding (rather than, for example, seeking to obtain funding through the competitive grant programs).”

Article By Chandler Ford, Casey Karthaus, Crissonna Tennison, and Shelby Garrett of The National Law Review / The National Law Forum LLC.

For more tribal law / indigenous peoples legal news, click here to visit the National Law Review.

Copyright ©2022 National Law Forum, LLC

Supreme Court Expands State Criminal Jurisdiction in Indian Country

In a 5-4 opinion issued Wednesday in Oklahoma v. Castro Huerta, No. 21-429, the Supreme Court expanded the authority of States to exercise criminal jurisdiction over non-Natives in Indian country without tribal consent or congressional authorization, upending a long-standing basic principle of Federal Indian Law and striking a blow to tribal sovereignty. Under federal law, “Indian country” has been interpreted as including Indian reservations, dependent Indian communities, Indian allotments, In Lieu sites (land outside reservation boundaries meant to replace lost Indian lands), and tribal trust lands. The majority opinion in Castro-Huerta, written by Justice Brett Kavanaugh, held that States presumptively have “inherent” jurisdiction over crimes committed in Indian country and “do not need a permission slip from Congress to exercise their sovereign authority,” dismissing the Court’s prior statements to the contrary as non-binding dicta. After concluding States presumptively have criminal jurisdiction in Indian country, the majority found that the General Crimes Act, 18 U.S.C. 1152, did not preempt that jurisdiction for crimes committed by non-Natives against Natives in Indian country. As a result, States now have concurrent criminal jurisdiction with the federal government to prosecute crimes committed by non-Natives against Natives in Indian country.

Castro-Huerta involved the prosecution of Defendant Victor Manuel Castro-Huerta, who was convicted in an Oklahoma State court of a crime against a Native child. Following the Supreme Court’s landmark decision in McGirt v. Oklahoma, 140 S. Ct. 2452 (2020), in which the Court concluded much of Oklahoma is Indian country, Castro-Huerta successfully argued that the State lacked jurisdiction to prosecute him because he committed his crime in Indian country. The State appellate court’s decision in Castro-Huerta’s favor followed the interpretation of the General Crimes Act that has prevailed since the statute’s 1948 reenactment. Under that interpretation, only the federal government has authority to prosecute non-Native individuals who commit crimes against Native individuals in Indian country.

Arguing before the Supreme Court, Oklahoma claimed that the prevailing interpretation is incorrect, and the majority agreed. The Court began its analysis by describing the details of Castro-Huerta’s crime and noting that of the 2 million people who live in Oklahoma, “the vast majority are not Indians.” Op. at 2. The Court also noted that Castro-Huerta had accepted a plea agreement with the federal government for a 7-year sentence followed by removal from the United States (he was in the United States unlawfully), receiving, in effect, a 28-year reduction in his sentence. Op. at 3. The majority stated that his case “exemplifies a now-familiar pattern in Oklahoma in the wake of McGirt” in which non-Indian criminals have received “lighter sentences in plea deals negotiated with the Federal Government” or have “simply gone free.” Op. at 3-4.

Citing the United States Constitution and prior Supreme Court decisions for the proposition that Indian reservations are “part of the surrounding State” and subject to State jurisdiction except as forbidden by federal law, the majority concluded that an “overarching jurisdictional principle dating back to the 1800s” is that “States have jurisdiction to prosecute crimes committed in Indian country unless preempted.” Op. at 5-6.

The majority then considered whether the State’s authority to prosecute non-Native v. Native crimes in Indian country had been preempted under the “ordinary principles of federal preemption” or because “the exercise of state jurisdiction would unlawfully infringe on tribal self-government.” Op. at 7. The majority found that the plain text of the General Crimes Act did not expressly provide for exclusive federal jurisdiction. Op. at 7-14. It then rejected Castro-Huerta’s argument that Public-Law 83-280 and similar statutes through which Congress authorized certain States to exercise jurisdiction in Indian country demonstrated Congress’s understanding that States presumptively lack such authority. The majority reasoned that, despite what Congress might have assumed, the question had not yet been decided and the statutes in question lacked language preempting State jurisdiction. Op. at 16-18. The statutes also provided for civil jurisdiction and State jurisdiction over Natives, in addition to criminal jurisdiction over non-Natives, so they were not entirely redundant.

Turning next to whether the exercise of State jurisdiction under the General Crimes Act would unlawfully infringe on tribal self-government, the majority applied the “Bracker balancing test,” which weighs tribal, federal, and state interests, and is generally used to determine whether a state tax is preempted when assessed against a non-Native on tribal land. The majority concluded that the Bracker factors supported State jurisdiction, dismissing any tribal preference for federal jurisdiction as irrelevant to the Court’s analysis, Op. 19 n.6, Op. 20 n. 7. Concluding the State’s inherent jurisdiction had not been preempted, the majority noted in its holding that, “Unless preempted, States may exercise jurisdiction to prosecute crimes committed by non-Indians against Indians in Indian country,” and this “applies throughout the United States,” including on Indian allotments. Op. 24 n.9.

In a scathing dissent, Justice Gorsuch, joined by Justices Breyer, Sotomayor, and Kagan, pushed back against the majority’s opinion, suggesting any future analysis would need to consider the specific context of each tribe, its treaties, and relevant laws. Dissent at 40-41 n.10. The dissent, appealing for a legislative fix, accused the majority of ignoring history, congressional action, precedent, and tribal sovereignty, and usurping “congressional decisions about the appropriate balance between federal, tribal, and state interests.” Dissent at 38.

Article By Charlene Koski of Van Ness Feldman LLP

For more tribal law legal news, click here to visit the National Law Review.

© 2022 Van Ness Feldman LLP

Before the Supreme Court…December 9, 2021

The Supreme Court placed two Indian law cases on its docket for the October 2021 term.

In Ysleta del Sur Pueblo v. Texas (20-493), the Supreme Court will determine whether legislation that restored federal recognition to two Tribes permits the State of Texas to regulate gaming activities on the Tribes’ land.  The restoration legislation contained a provision stating that “[a]ll gaming activities which are prohibited by [Texas] are hereby prohibited on the reservation[.]”  Because Texas regulates bingo but does not prohibit it, the Tribe asserts that it therefore retains full authority to set the terms of its bingo games and need not comply with Texas’ regulations.  Texas argues that the Tribe must submit to Texas’ regulations.  The Fifth Circuit sided with Texas, holding that Texas’ regulations became surrogate federal law under the restoration legislation.  The federal government filed a brief supporting the Tribe and urging the Supreme Court to take the case.  The case will directly affect the two Tribes subject to the restoration legislation, but there may be broader implications depending on whether the Supreme Court accepts or rejects the idea that state regulations may, under certain circumstances, become surrogate federal law that Tribes must follow.

In Denezpi v. United States (20-7622), the Supreme Court will decide whether a Tribal member convicted for assaulting another Tribal member on trust land in a “CFR Court” can later be tried for the same conduct in U.S. District Court.  The defendant was charged with serious offenses in the Court of Indian Offenses of the Ute Mountain Ute Agency.  Unlike a Tribal court, Courts of Indian Offenses (or “CFR Courts”—so called because they are authorized by the Code of Federal Regulations) are created by the Bureau of Indian Affairs to administer criminal justice for Tribes lacking their own courts.  The CFR Courts may prosecute violations of Tribal ordinances and other offenses listed in the regulations.  The defendant was charged with three offenses in the CFR Court and ultimately pled guilty to one count and received a 140-day sentence.  Six months later, the defendant was indicted in U.S. District Court.  The defendant asserted his prosecution was barred by the double jeopardy clause of the U.S. Constitution.  The lower federal courts, however, concluded that the CFR Court was not exercising the sovereignty of the United States, but was instead exercising the sovereign powers of the Ute Mountain Tribe.  Under the long-established “dual sovereignty” doctrine, the federal government may prosecute an American Indian after a Tribal prosecution for the same act.  The same rule generally permits the federal government to charge an individual with a federal crime even after that person has been tried for the same conduct in state court.  The key question for the Supreme Court to decide is: whose sovereignty is the CFR Court exercising?  The answer will affect the five existing CFR Courts that serve more than a dozen Tribes.

The Supreme Court has not yet decided whether it will hear an appeal in Haaland v. Brackeen.  In that case the Fifth Circuit held several provisions of the Indian Child Welfare Act (“ICWA”) to be unconstitutional.  If the Supreme Court agrees to hear the case it will likely become the most significant Indian law case of the term.

This article was written by Patrick Daugherty of Van Ness Feldman law firm. For more articles on tribal law, please click here.

Tribal Cannabis Tourism and Current Status of Federal Legislation Impacting the Cannabis Industry

As Tribes expand their economic endeavors into the cannabis industry, the growth of cannabis tourism is a natural development. Below, we offer details on how cannabis tourism could support Tribal governments’ economic development efforts. We also provide an update on the status of pending federal legislation that could bring positive impacts to the cannabis industry.

Cannabis Tourism

With the pandemic continuing to take a toll on the tourism industry, many U.S. states and territories are exploring ways to help that industry recover. One potential savior for tourism is cannabis. As states went into varying levels of lockdown in early 2020, businesses deemed “nonessential,” including recreational facilities, gyms, bars, restaurants, etc. were forced to shut down. However, early into lockdown, cannabis was deemed “essential” in California, a designation other states with functional cannabis markets quickly adopted. In total, nearly 30 states, along with the District of Columbia and Puerto Rico, deemed cannabis businesses essential. This triggered some major changes in the industry, including:

With all of these changes, cannabis tourism has developed into a potentially rewarding industry that Tribal governments might be able to cultivate as part of efforts to recover economic losses suffered by their tourism and other businesses

What is Cannabis Tourism?

Cannabis tourism is most generally characterized as a destination-based industry that attracts tourists because cannabis is legal in that location. But the industry can take many forms. For example, tourists might visit a dispensary to learn more about the development of cannabis crops, stay at a “bud and breakfast,” tour a cannabis farm or growing facility, or dine at a restaurant with cannabis-infused dishes. Cannabis tourism can also have a positive knock-on effect for many other Tribal businesses.

How can Tribes Participate?

Interested Tribes can create specific cannabis-centered tourist destinations. One example is opening a farm or growing facility that is similar to a wine vineyard, where consumers can tour the facility and sample the products. This concept would serve multiple functions in that the farm would supply dispensaries while providing a tourism destination that would benefit hotels, restaurants, and the local economy.

Another route is to add cannabis tourism into existing tourism infrastructure. Tribes can take advantage of their land base and natural resources by offering cannabis hikes or camping expeditions, where participants are able to experience nature while partaking. Tribes with resort properties can offer CBD-infused massages at their spa, include CBD and hemp products at their gift shops, or offer travel packages designed for cannabis tourists. The idea behind this approach is to utilize the Tribe’s existing tourism infrastructure to provide new cannabis tourism options.

Federal Cannabis Legislation Update

The following is an update on pending federal legislation that would impact the cannabis industry. Summaries of previous cannabis legislative developments are provided in past articles..

The Democrats control both the House and the Senate (with Vice President Harris acting as the tie-breaking vote in the 50-50 Senate) but passing any cannabis legislation in the current Congress might prove difficult. The filibuster rules require 60 votes for a bill to pass the Senate, so any cannabis legislation would need relatively strong bipartisan support.

The future of federal cannabis law remains unclear, but Tribes interested in the cannabis industry can start taking steps now to establish the necessary framework to support this new area of Tribal economic enterprise.

Article By Robert A. Conrad and Laura E. Jones of Van Ness Feldman LLP

For more biotech, food, and drug legal news, click here to visit the National Law Review.

© 2021 Van Ness Feldman LLP

Review of McGirt v. Oklahoma – How the Supreme Court and Justice Gorsuch’s Revolutionary Textualism Brought America’s “Trail of Tears” Promise to the Creek Nation Back From the Dead

How does a child sex offender’s appeal of his criminal conviction result in half the State of Oklahoma – 113 years after it was admitted as the 46th State in the Union – being declared “Indian Lands” and given back to the Creek Nation Native Americans? That is the crazy plot not of a Best-Selling novel, but of the United States Supreme Court case McGirt v. Oklahoma, No. 18-9526, decided 5-4 late this term on July 9, 2020 in a ground-breaking majority opinion written by Justice Neil Gorsuch.

To understand McGirt’s impact we must start with its historical context. Roughly 180 years ago, a group of indigenous Native Americans known as the Five Civilized Tribes – the Cherokee, Chickasaw, Choctaw, Creek and Seminole – lived as autonomous nations throughout the American Deep South, as they had for hundreds of years before. As our new United States nation grew, however, European Americans were growing in number and had designs on the land for expansion of the young country. Not surprisingly, these designs didn’t include a place for Native Americans.

The “Indian Problem”

To remedy this so-called “Indian Problem,” the federal government imposed a forced relocation plan to remove the Native Americans from the Deep South. This plan, first championed by George Washington, evolved and was codified in American law and history by President Andrew Jackson, when he successfully pushed the Indian Removal Act of 1830 through Congress (over pioneer Davy Crockett’s fervent, raccoon-capped objection!). It was the Indian Removal Act of 1830 that authorized the federal government to extinguish all Indian title to Deep South lands, and to fully and finally remove the Native Americans by any means necessary.

To peacefully execute this plan, the federal government made a promise to the Five Civilized Tribes that if they agreed to remove themselves voluntarily, they would forever be granted replacement land out in the frontier American West. Had they not agreed, of course, the federal government was more than ready to remove them by force. Realizing they’d been given a Godfather-like “offer you can’t refuse,” the Tribes agreed that they would remove West, in reliance on this promise. One of the Five Civilized Tribes who accepted the government’s offer was the Creek Nation (who, while not a party to McGirt, became the biggest beneficiary of its ultimate holding). That almost 200-year-old promise is where the story of McGirt v. Oklahoma begins.

In what is known in American history as the “Trail of Tears,” beginning in the 1820s and into the 1830s, approximately 60,000 Native American men, women and children were uprooted from their ancestral homes and forced as refugees to pick up and walk hundreds of miles West on faith that the federal government’s promise would be honored. The “Trail of Tears” is a traumatic part of Native American history, as more than 4,000 Native Americans died from exposure, disease and starvation before ever reaching their promised lands. A promise that was made, but never fully fulfilled.

As Justice Gorsuch summarized in his majority opinion:

On the far end of the Trail of Tears was a promise. Forced to leave their ancestral lands in Georgia and Alabama, the Creek Nation received assurances that their new lands in the West would be secure forever. In exchange for ceding “all their land, East of the Mississippi river,” the U.S. government agreed by treaty that ‘[t]he Creek country west of the Mississippi shall be solemnly guarantied to the Creek Indians.” Treaty with the Creeks, Arts. I, XIV, Mar. 24, 1832, 7 Stat. 366, 368 (1832 Treaty).

It was against this great historical backdrop that the otherwise unremarkable criminal appeal of McGirt v. Oklahoma arose.

An Otherwise Unremarkable Appeal

By all accounts, Jimcy McGirt, a Native American, was an unsavory character and is by no means a hero of this story. In 1997, the State of Oklahoma convicted him of molesting, raping and forcibly sodomizing a four-year-old girl, his wife’s granddaughter. His other appellate grounds apparently unconvincing, and the individual circumstances of his case so horrific, his appellate lawyers – as good lawyers do – instead focused elsewhere, on an issue that had been simmering under the surface of Oklahoma state law for years. Perhaps, the lawyers argued, regardless of Mr. McGirt’s heinous conduct, his conviction is null and void for reasons other than the facts of the underlying case all together? Perhaps Oklahoma did not even have jurisdiction – the power – to criminally prosecute and/or to convict him in the first place, because the crime, as heinous as it was – was committed not on state land, but instead on federal “Indian Lands.” Land that Oklahoma has owned and controlled for over 100 years, but that the Creek Nation had been promised, pursuant to treaty, long ago.

Great headwinds worked against McGirt and his appellate counsel, not the least of which was that all of the main parties involved – the United States, the State of Oklahoma – and even the Creek Nation itself – had acquiesced to Oklahoma’s criminal jurisdiction and control over the land for the past 100 years.

As Justice Gorsuch succinctly put it, the question presented in McGirt was “did [McGirt] commit his crimes in Indian Territory?” Or was the crime committed on lands, as everyone seemed to assume for the past century, owned and controlled by State of Oklahoma?

If Eastern Oklahoma (including the large city of Tulsa) was in fact “Indian territory,” i.e. a reservation granted by the United States after the “Trail of Tears” promise, then it would be federal land and pursuant to the Major Crimes Act (MCA), McGirt could not be prosecuted by the State of Oklahoma, but could only be prosecuted by the federal government in federal court. And if that were the case, then McGirt’s conviction would be void, as Oklahoma had no more power to prosecute and convict McGirt of his crimes than you or I do sitting in our comfiest chair.

On its face, the question sounds almost ridiculous. Oklahoma has been a State prosecuting and convicting criminals, including in the areas of Eastern Oklahoma, for over 100 years. Land that McGirt now argues were never under Oklahoma’s power to control, but instead were always part of the Creek Reservation. Oklahoma countered, of course, with what seems like the more logical and pragmatic answer to that question – that through subsequent legislation, Oklahoma’s statehood in 1907, and the passage of generations without recognizing the Creek Nation’s sovereignty over these lands – that even if the land had been the Creek Nation’s at one point, that ended long ago. Oklahoma presented its argument as if it were a “no brainer.”

Justice Gorsuch’s “Textualist” Approach

Justice Gorsuch saw it differently. Siding with the 4 more liberal Supreme Court Justices, Justice Gorsuch wrote for the majority of the Court finding that the land did belong to the Creek Nation, that it was not a part of Oklahoma, and that therefore McGirt’s conviction must be vacated.

Most compelling, however, was how Justice Gorsuch boldly advanced his “textualist” approach in this opinion, regardless of whether it led to a “liberal” or “conservative” outcome.

Justice Gorsuch was President Donald J. Trump’s first Supreme Court appointee. He was championed as a staunch political conservative who would push the Supreme Court to the right. While no one can doubt Justice Gorsuch’s conservative bona fides, what was less understood by the talking heads in the media was that his true convictions are not to political ideology – but to his own brand of “textualist” legal philosophy.

Through this “textualist” lens, Justice Gorsuch ignored all of the numerous arguments over whether the argued outcomes would be best, most reasonable, or most fair and just. Instead, he focused squarely on the words used by Congress when it made and carried out its “Trail of Tears” promise to the Creek Nation. To that end, Justice Gorsuch posited the premise that once a reservation is established by Congress, the only question is whether Congress ever took that reservation away. You can’t look to the States. The law is clear that the States do not have any power to declare or negate a federally granted Indian Reservation. You also can’t look to the Courts. The Courts cannot judicially legislate a reservation into, or out of, existence. Therefore, what must be focused on exclusively is whether Congress ever expressly broke its “Trail of Tears” promise and ended the Creek Nation’s reservation. For that “[t]here is only one place we may look:” Justice Gorsuch said matter-of-factly, “the Acts of Congress.”

In applying this purely “textualist” approach, Justice Gorsuch was unyielding:

History shows that Congress knows how to withdraw a reservation when it can muster the will. Sometimes, legislation has provided an “explicit reference to cessation” or an “unconditional commitment … to compensate the Indian tribe for its opened land.” Ibid. Other times, Congress has directed that tribal lands shall be “restored to the public domain.” Hagen v. Utah, 510 U.S. 399, 412 (1994)(emphasis deleted). Likewise, Congress might speak of a reservation as being “discontinued”, “abolished”, or “vacated.” Mattz v. Arnett, 412 U.S. 481, 504, n. 22 (1973). Disestablishment has “never required any particular form of words,” Hagen, 510 U.S., at 411. But it does require that Congress clearly express its intent to do so, “commonly with an explicit reference to cessation or other language evidencing the present and total surrender of all tribal interests.” Nebraska v. Parker, 577 U.S. 481 (2016).

Oklahoma attempted to argue that either a reservation was never established, or the text of the subsequent Acts of Congress, if not expressly, at least effectively terminated any reservation that may have ever existed. But in Justice Gorsuch’s deft hands, this argument was doomed to fail. As Justice Gorsuch famously and efficiently proclaimed in his now famous Bostock v. Clayton County Title VII opinion earlier this term: “(o)nly the written word is law, and all persons are entitled to its benefit.” This is the textualist (almost religious) creed, and to ignore it as the foundation of any argument before this Court in its current make-up is done at one’s own peril.

To Justice Gorsuch (and most times a majority of this Court), one must set aside all else – what “chaos” may ensue from a ruling, what the conventional wisdom is on an issue (or here, has been for over a hundred years), or – more controversially put – what may be the best or most just outcome of a dispute – and decide disputes based solely on the written words of the law at issue. To a textualist, all citizens should be able to rely on the law as written, regardless of what even a majority may believe was intended by the law, or what an individual jurist may believe in a given case is a more just outcome. It is Judge Gorsuch’s purely textualist approach that dictated the outcome in this case, more than any political ideology or concern.

Once Justice Gorsuch rejected Oklahoma’s argument on the text of the law, he further applied his own textualist principles to dismiss the others. Oklahoma’s argument that the “historical practices and demographics, both around the time of, and long after the enactment of, all the relevant legislation” controlled was soundly rejected. To ignore the plain meaning of the words of a statute based upon matters outside the text, in Justice Gorsuch’s thinking, would risk, as he stated, “substituting stories for statutes.” Stories, to a textualist, are inherently more unreliable than the plain meaning of words on a page. Here, historical stories also typically favor history’s victors and undermine its victims. In this case, Justice Gorsuch found an exemplar case to divorce his “textualist” approach from previous criticism from the left that it is merely a conservative tool, or means to dictate conservative ends. Once you accept stories over the written word of law, to Justice Gorsuch, then the law itself is unmoored and subject only to the prevailing political winds of the time.

Justice Roberts’ Striking Dissent

Almost as striking as Justice Gorsuch’s triumphant planting of his textualist flag this term in Bostock and now McGirt, was Justice Roberts’ continued trend towards a more pragmatic and cautious legal approach. While that trend was highlighted more by pundits in cases where he sided with the more liberal justices, in McGirt, Justice Roberts again (even though he sided with the conservatives) championed the narrower and less ideological approach.

Writing for the four dissenting Justices, Justice Roberts concluded that “a century of practice confirms that the Five Tribes’ prior domains were extinguished.” The dissent ignored what Justice Gorsuch and the other majority justices could not. That to hold as such would be to allow Oklahoma to re-cast its decades of illegal practices, usurpation of authority, and mistreatment of the Creek Nation into “historical custom and practice” that it could then use to justify its dishonoring the “Trail of Tears” promise.

McGirt most assuredly creates sensational headlines due to its massive shift of power and authority from Oklahoma to the Creek Nation. Most articles reviewing this case focus on the uncertainty it will cause in matters between Native Americans and States within whose borders Indian Reservations exist. However, McGirt is also important for another, less sensational, but perhaps more impactful assertion regarding the rule of law in America going forward – the rise of Justice Gorsuch’s brand of “textualism.”

Takeaways

To Justice Gorsuch, the rule of law and the word of the law are paramount to all other interests. As the saying goes – one’s word is their bond. And it is that word – and that word alone – that should always be honored, whether you are a person, or a country. Justice Gorsuch closed his opinion consistently:

Today, we are asked whether the land these treaties promised remains an Indian reservation for purposes of federal criminal law. Because Congress has not said otherwise, we hold the government to its word.

While perhaps over 100 years late, in McGirt, the United States Supreme Court affirmed that what you promise must be honored, and in doing so, belatedly (and surprisingly) fulfilled a “Trail of Tears” promise most thought died long ago.

Copyright 2020 © Burg Simpson Eldredge Hersh & Jardine, P.C.

Practical Tips for Tribal Organization Access to the SBA Paycheck Protection Program

Even with news that the initial appropriation for the Paycheck Protection Program (“PPP”), an extension of the Small Business Administration’s 7(a) loan program, has been fully allocated, there are many strategies tribal organizations need to put in place to ensure that the full benefits of the program are realized.  Putting these few practical tips to work – even midway through the PPP process – will give tribal business a better chance of having pending applications accepted and funded, the maximum amount of loan forgiveness achieved later this year, and any new applications accepted with the next Congressional appropriation are quickly funded.

Initial applications for these loans – up to $10 million in debt that may be largely forgivable – have been heavy, and banks are reporting overwhelming demand and challenging delays in pushing out loan funding.  With the promise of more funding (perhaps more than another $200 billion) for this program looming first on Congress’ agenda over the next few weeks – even tribal organizations that have not fully explored the PPP program should consider these practical business insider tips to prepare for success:

  • Understand that there is minimal bank underwriting. The model loan application, the interim program rule, and other SBA guidance documents make abundantly clear that banks are “held harmless” for the vast majority of decisions on PPP loans.  Information requested on the application is minimal and the list of items that must be submitted as supporting documentation is modest (and limited to relevant payroll, benefit, rent, and utility cost information).  This was a policy choice by legislators and rule makers to facilitate the fast deployment of funds under the program.  The implication of light underwriting, however, is that the normal “give and take” process with loan officers to ensure the application is well-balanced and complete is not really happening.  The burden on the banks right now is to loan money fast.
  • Be aware of the heavy borrower burden to “certify” data and key eligibility criteria. The burden of accurate information and fulsome disclosures is entirely on tribal organizations.  Tribal officials or business leaders signing the loan application should personally review the certifications required before submitting the loan (they are on the application) and should not be afraid to question staff or legal counsel on implications in detail.  In a time of crisis, there is not much emphasis on the future oversight, investigation, and enforcement matters that can arise when agencies do an after-the-fact “government accountability” examination of the program.  Given that many tribal organizations and Alaska Native Corporations depend on health relationships with the SBA, great care should be exercised that your application does not subject you to unwanted future scrutiny.
  • Engage early with key contacts at your primary bank.  Banks are under water with demand for funds under the PPP right now.  There are numerous reports that banks are sending small business clients with multiple banking relationships (accounts and/or bank branded credit cards in more than one place) away, claiming another institution is their “primary bank” for application purposes.  A key to any tribal organization’s success in a PPP application is to have person-to-person contact with your banking relationship manager or the designated PPP coordinator. The application is online and completed through a bank portal.  Getting questions resolved and placing your organization on the radar of the PPP loan staff can ensure fewer delays and a smoother application process.
  • Accurate record keeping of use of funds is critical.  One of the most attractive features of the PPP program is that the loan can be largely, if not entirely, forgiven. The banks will be backstopped by funds appropriated to the SBA and by a facility recently approved the Federal Reserve.  Whether your loan is fully forgiven depends on your accurate record keeping and timely submission to the bank later this summer.  The burdens of weathering this pandemic are significant enough that achieving maximum loan forgiveness could be make-or-break for some tribal organization budgets.
  • Public disclosure implications.  Please be aware that submissions made to any government program under the CARES Act may be discoverable by third parties through the Freedom of Information Act (“FOIA”).  While it is unlikely that any proprietary data on payroll or employees (with privacy concerns) would be released, information about the officers of the business, what it does, and how much its loan was will likely be released from SBA files if a proper FOIA request is submitted in the future.
  • Traditional SBA eligible business rules apply.  With the exception of non-profit businesses (which are now eligible), all of the businesses listed in the SBA rules (at 13 CFR 120.110) are still ineligible for SBA business loans.  Please consult these rules and your legal counsel to assess whether you are eligible for a PPP loan under these rules.

© 2020 Van Ness Feldman LLP

For more on the SBA Paycheck Protection Program, see the National Law Review Coronavirus News Section.

Indian Nations Law Focus – August 2014

In Cayuga Indian Nation of New York v. Seneca County, N.Y., 2014 WL 3746795 (2d. Cir. 2014), the Cayuga Indian Nation had refused to pay taxes on land that had been alienated in the early 19th century in violation of the Indian Non-Intercourse Act but reacquired by the nation in the modern era and held in fee simple title. The district court held that, even though the county had the right to impose a property tax on the property, it could not foreclose for non-payment because of the Nation’s sovereign immunity. The Second Circuit affirmed, rejecting the county’s argument that a foreclosure action was in rem (against the property) rather than against the nation: “In Michigan v. Bay Mills Indian Community, [cite omitted], the Supreme Court once again held that tribes retain, as a necessary corollary to Indian sovereignty and self-governance, a common-law immunity from suit. This treatment of tribal sovereign immunity from suit is an avowedly broad principle, and the Supreme Court (like this Court) has thought it improper suddenly to start carving out exceptions to that immunity, opting instead to defer to the plenary power of Congress to define and otherwise abrogate tribal sovereign immunity from suit.” (Internal cites and quotes omitted.)

In Alabama-Coushatta Tribe of Texas v. United States, 2014 WL 3360472 (5th Cir. 2014), the Tribe sued various Department of Agriculture agencies, challenging the National Park Service’s issuance of permits to drill for oil or gas in the Big Thicket National Preserve; (2) the Forest Service’s issuance of drilling permits for privately owned mineral estates located under the Sam Houston and Davy Crockett National Forests; (3) the Bureau of Land Management’s issuance of oil and gas leases for land in the Sam Houston and Davy Crockett National Forests, and the collection of royalties and rent payments from these leases; and (4) the National Forest Service’s exploitation and sale of timber resources from the Davy Crockett and Sam Houston National Forests. The Tribe contended that it heldaboriginal title to the subject lands and that the federal permits violated the federal government’s obligations under the common law trust doctrine and the Non-Intercourse Act. The district dismissed for lack of subject matter jurisdiction and the Fifth Circuit affirmed, holding that the tribe had failed to allege “agency action” sufficient to meet the standards required for waiver of the Government’s sovereign immunity under the Administrative Procedure Act: “[T]he tribe’s lawsuit is an impermissible programmatic challenge, and therefore, we lack jurisdiction over these claims. The Tribe’s complaint fails to point to any identifiable action or event. Instead, the complaint brings a challenge to the federal management of the natural resources on the land in question. The complaint contends only that all of the leases, permits, and sales administered by multiple federal agencies, including any ongoing action by these agencies that encroach on the Tribe’s aboriginal title, are unlawful. These are allegations of past, ongoing, and future harms, seeking ‘wholesale improvement’ and cover actions that have yet to occur. Such allegations do not challenge specific ‘agency action.’” 

In U.S. v. Whiteagle, 2014 WL 3562716 (7th Cir. 2014), Timothy Whiteagle was convicted of 12 federal offenses under 18 U.S.C.A. §§ 371 and 666, including conspiracy, corruption, bribery, tax evasion and perjury, arising out of his scheme to bribe Pettibone, a Ho-Chunk nation legislator, into using his influence to cause the nation to award tribal business to three different vendors that had hired Whiteagle. After the court sentenced Whiteagle to 10 year’s imprisonment, he appealed, arguing that there was insufficient evidence of Pettibone’s knowing participation in the charged conspiracy and acts of bribery, that the district court erred in permitting the introduction of certain evidence, that the court erred in estimating amounts lost to the nation and that the moneys conveyed to Pettibone were incorrectly characterized as bribes rather than gratuities. The Seventh Circuit rejected all of Whiteagle’s arguments and affirmed: “It was reasonable to infer, as the district court did, that the three companies were willing to pay Whiteagle such large sums of money specifically because of his relationship with Pettibone and his professed ability to deliver Pettibone’s vote and influence within the Ho-Chunk legislature. Moreover, Whiteagle’s insistence that his role be kept quiet (recall MCA’s laundering of his compensation through Support Consultants, and Whiteagle’s suggestions that Trinity hide the proposed consulting fees meant for Atherton and himself in other expenses) supported an inference that his compensation was not legitimately earned. It is also a fair inference, given the evidence presented at trial, that it was the bribes Whiteagle transmitted to Pettibone, rather than Whiteagle’s persuasiveness as a lobbyist, that secured Pettibone’s favorable action as a legislator:” 

In Narula v. Delbert Services Corporation, _____ F.Supp.2d ___, (E.D. Mich. 2014), Narula had borrowed $5,000 from Western Sky Financial, LLC (Western Sky), a reservation-based payday lender. Western Sky transferred the loan to Delbert Services Corporation. After defaulting, Narula sued in federal court, alleging that the loan violated the Fair Debt Collection Practices Act and the Telephone Consumer Protection Act. Delbert contended that the plaintiff was required by the loan agreement to arbitrate her claims and, further, that the loan agreement provided for exclusive jurisdiction in the Cheyenne River Sioux Tribe Court. The district court dismissed, holding that the tribal court had no jurisdiction over the parties “because neither party has any ties whatsoever to the tribal nation,” but that the arbitration clause was enforceable: “Allegations of fraudulent schemes are not sufficient to overcome the strong federal policy in favor of arbitration. The central question is whether the plaintiff’s claim of fraud, as stated in the complaint, relates to the making of the Arbitration Agreement itself. Here, there are no allegations in the complaint that Defendant fraudulently induced Plaintiff to agree to an arbitration clause.” 

In Blue Lake Rancheria v. Morgenstern, 2014 WL 3695734 (E.D. Cal. 2014), a federally recognized tribe, Blue Lake Rancheria Economic Development Corporation (EDC), a corporation owned by the tribe and chartered under Section 17 of the Indian Reorganization Act, and Mainstay Business Solutions, a subsidiary of the EDC (collectively, “Plaintiffs”) provided employee staffing services to businesses. Plaintiffs sued California officials seeking declaratory and injunctive relief related to the defendants’ enforcement of state unemployment taxes mandated by the Federal Unemployment Tax Act, 26 U.S.C. § 3301 et seq. (FUTA), including encumbering tribal lands and assets, in violation of Plaintiffs’ alleged tribal sovereignty. Plaintiffs sought to amend their complaint to add a claim under the Civil Rights Act of 1871, 42 U.S.C. § 1983, for injunctive relief. Citing the Supreme Court’s 2003 decision in Inyo County, California v. Paiute–Shoshone Indians, the Court denied the motion, holding that the the Plaintiffs were seeking to vindicate sovereign rights and, therefore, were not “persons” with standing to sue under Section 1983: “Plaintiffs are not seeking to protect individual rights from government encroachment, but to protect the communal interests of the tribe in a financial relationship with the State of California. This special relationship is the direct result of Plaintiffs exercising their ‘prerogative’ to become a reimbursable employer, a choice afforded to them as a federally recogn
ized Indian tribe.” 

In Navajo Nation v. U.S. Dept. of the Interior, 2014 WL 3610948, not reported in F.Supp.2d (D. Ariz. 2014), the United States had, in 1954, intervened in a water rights suit in its role as trustee in order to assert federally reserved Winters water rights in the Lower Colorado River on behalf of a number of entities. On behalf of the Navajo Nation, the government asserted a claim only with respect to water from the Little Colorado River, a tributary of the Colorado. The litigation ultimately resulted in no allocation of water rights for the nation but allocations did occur in a number of subsequent federal actions. In the instant case, the Navajo Nation sought to establish rights to Colorado River Lower Basin water, arguing that, under the Winters doctrine, the United States “impliedly reserved for the benefit of the Navajo Nation a sufficient amount of water to carry out the purposes for which the Reservation was created, specifically to make the Reservation a livable homeland for the nation’s present and future generations.” The nation further asserted that the government was required by its trust obligation to assure sufficient water for the nation. Specifically, the nation contended that various interim rules administered by the federal government were adopted in violation of the National Environmental Protection Act (NEPA). The United States conceded that the nation has reserved water rights under the Winters doctrine but contended that it had assisted the nation with acquisition of water supply in the San Juan Settlement and that it was pursuing the nation’s Winters rights in the ongoing general adjudication of the Little Colorado River System. The district court dismissed the nation’s claims, holding that the nation had no standing to bring the NEPA-based claims because it could not demonstrate that the federal regulations prejudiced its Winters rights. The court acknowledged that “the United States owes a generaltrust responsibility to Indian tribes,” but held that “unless there is a specific duty that has been placed on the government with respect to Indians, the government’s general trust obligation is discharged by the government’s compliance with general regulations and statutes not specifically aimed at protecting Indian tribes.” 

In Black v. U.S., 2014 WL 3337466 (W.D. Wash. 2014), police officers of the Suquamish and Port Gamble S’Klallam Indian Tribes (PGST), with the assistance of county sheriff’s deputies, sought to arrest PGST member Callihoo at a home owned by Anthony Black, a non-Indian, on fee land within the boundaries of the Suquamish reservation. In the ensuing confrontation, officers shot and killed Black. Black’s sister, who also resided at the home, brought a civil rights action pursuant to 42 U.S.C. § 1983 against the tribes and the tribal police officers. The court dismissed the claims against the tribes, but not the officers, on sovereign immunity grounds, holding that the officers acted in concert with sheriff’s deputies and, therefore, arguably under “color of state law” for Section 1983 purposes: “Tribal sovereign immunity, like other types of sovereign immunity, extends to officers acting in their official capacity and within the scope of their authority. However, this does not alter ‘the rule that individual capacity suits related to an officer’s official duties are generally permissible.’ Since Black is suing the officers in their individual capacities for actions taken within the scope of their employment under the color of state law, she has established a cognizable claim under § 1983 that may proceed under the jurisdiction of this Court.” 

In Harvey v. Ute Indian Tribe of Uintah and Ouray Reservation, 2014 WL 2967468, not reported in F.Supp.2d. (D. Utah 2014), plaintiffs initially sued four defendants in state court, including the Ute Indian Tribe of the Uintah and Ouray Reservation and officials of the Ute Tribal Employment Rights Office (UTERO), seeking a declaration with respect to the tribe’s and UTERO’s exercise of authority over non-Indians in certain categories of land based on principles of federal Indian law and also alleging two state-law causes of action, tortious interference with economic relations and extortion, against the UTERO defendants. Two of the defendants consented to state court jurisdiction. Later, the tribe removed the case to federal court, but that court remanded for lack of federal jurisdiction, holding that the removal required unanimity among the defendants, which could not be obtained: “Because the Initial Defendants manifested an intent to litigate in state court, and because they failed to remove soon after they became aware of possible federal-question issues, they waived their right to removal and their right to consent to removal. Removal to this court was therefore improper.” 

In Wells Fargo Bank, N.A. v. Chukchansi Economic, 118 A.D.3d 550 2014 WL 2721993, — N.Y.S.2d —- (N.Y. App. 2014), Chukchansi Economic Development Authority (CEDA), an agency of the Picayune Rancheria of Chukchansi (tribe), had issued $310 million in bonds to finance construction of a casino resort. The bond indenture Agreement required that CEDA deposit all revenues from the Casino’s operation into deposit accounts at Rabobank, and also required that CEDA, Wells Fargo, and Rabobank execute a Deposit Account Control Agreement (DACA). Competition between two factions, each purporting to be the tribe’s official government, triggered litigation over control of casino revenues in multiple jurisdictions, including New York. The trial court had granted a preliminary injunction ordering the CEDA to maintain deposits at Rabobank and, later, had granted plaintiff’s motion to dismiss appellants’ counterclaim, granted defendants-respondents’ motion to dismiss appellants’ cross claims, and denied appellants’ motions to modify the court’s July 2, 2013 preliminary injunction. Appellants subsequently appealed from the court’s refusal to modify the preliminary injunction. The appellate court held that the state court lacked jurisdiction over an intra-tribal dispute: “Appellants seek a declaration that defendant Chukchansi Economic Development Authority (CEDA) is lawfully governed by a board composed of seven named individuals; however, appellants themselves allege in their counterclaim and cross claims that the members of the CEDA Board are the same as the members of defendant Tribal Council of the Tribe of Picayune Rancheria of the Chukchansi Indians. The jurisdiction conferred on the New York courts by 25 USC § 233 “does not extend beyond the borders of this State” The tribe in the instant action is located in California, not New York. Furthermore, 25 USC § 233 “does not authorize courts of the State of New York to become embroiled in internal political disputes amongst officials of [an Indian tribe]’s government” (Bowen, 880 F Supp at 118; see also id. at 116, 120, 122–123). However, to decide whether the Ayala faction’s actions were illegal, a court would have to determine whether the Ayala faction was the legitimate Tribal Council; this it may not do.” 

In Simmonds v. Parks, (Alaska 2014), the Minto Tribal Court had terminated the parental rights of Edward Parks, a member of the Native Village of Stevens, and Bessie Stearman, a member of the Native Village of Minto, to their daughter S.P. The tribal court did not permit the attorney for Parks and Stearman to argue orally at the hearing that the court lacked jurisdiction due to Parks’ non-membership in the Minto Native Village. Parks did not file an appeal with the Minto Court of Appeals but instead sued S.P.’s foster parents, the Simmondses, in state court to regain custody of S.P. The Simmondses moved to dismiss Parks’s state lawsuit on the basis that the tribal
court judgment terminating parental rights was entitled to full faith and credit under the Indian Child Welfare Act(ICWA). The superior court denied the motion to dismiss, concluding that full faith and credit was not warranted because the tribal court had denied Parks minimum due process by prohibiting his attorney from presenting oral argument. The Alaska Supreme Court reversed, holding that Parks was required to exhaust his tribal court remedies and that the state court lacked jurisdiction: “Through ICWA’s full faith and credit clause, Congress mandates that states respect a tribe’s vital and sovereign interests in its children. This requires that we give the same respect to tribal court judgments that we give to judgments from a sister state. As a measure of that respect, we have refused to allow a party to collaterally attack a sister state’s judgment when the party failed to appeal in that state’s courts. Looking to federal law to interpret ICWA’s full faith and credit mandate, we find persuasive the policies underlying the federal doctrine of exhaustion of tribal remedies, and we adopt that doctrine in this context. Unless one of the exceptions to the exhaustion doctrine discussed below applies, we will not allow a party to challenge a tribal court’s judgment in an ICWA-defined child custody proceeding in Alaska state court without first exhausting available tribal court appellate remedies.”

The Supreme Court Decides Bay Mills Case, Leaves Tribal Sovereign Immunity Intact

Godfrey Kahn

In its long-awaited decision in Michigan v. Bay Mills Indian Community, the U.S. Supreme Court today re-affirmed its 1998 holding in Kiowa Tribe v. Manufacturing Technologies, Inc. 523 U.S. 751 (1998) that tribal sovereign immunity extends to tribes’ governmental and commercial activities, both on reservation and off. In a 5-4 decision, the Court affirmed the Sixth Circuit’s decision that the Indian Gaming Regulatory Act waiver of tribal sovereign immunity for suits to enjoin gaming on Indian lands in violation of a tribe’s gaming compact with a state did not apply to tribal gaming on non-Indian lands and that the State was barred by the doctrine of sovereign immunity from suing the Tribe directly for damages.

The Court rejected Michigan’s arguments that Kiowa was wrongly decided and that tribes should enjoy no immunity with respect to their commercial, off-reservation activities. The majority opinion, authored by Justice Kagan and joined by Justices Roberts, Kennedy, Breyer and Sotomayor, emphasized the doctrine that the court should not overrule its previous decisions without special justification (stare decisis), pointing out that (1) the Court had explicitly invited Congress to consider limitations on tribal sovereign immunity its Kiowa decision, (2) Congress had, in fact, considered several bills that would have imposed broad limits but had not enacted any of them (“Having held in Kiowa that this issue is up to Congress, we cannot reverse ourselves because some may think its conclusion wrong” Slip. Op. 20), and (3) Michigan had other means of enforcing state law against Bay Mills, including denial of required licenses, suits against employees and officials of the tribe to enjoin violations of state law and criminal prosecution of tribal officials and employees and for violations of state criminal laws.

The Court concluded:

As “domestic dependent nations,” Indian tribes exercise sovereignty subject to the will of the Federal Government. …Sovereignty implies immunity from lawsuits. Subjection means (among much else) that Congress can abrogate that immunity as and to the extent it wishes. If Congress had authorized this suit, Bay Mills would have no valid grounds to object. But Congress has not done so: The abrogation of immunity in IGRA applies to gaming on, but not off, Indian lands. We will not rewrite Congress’s handiwork. Nor will we create a freestanding exception to tribal immunity for all off reservation commercial conduct. This Court has declined that course once before. To choose it now would entail both overthrowing our precedent and usurping Congress’s current policy judgment.

In her concurring opinion, Justice Sotomayor asserted that the historical basis for tribal sovereign immunity is stronger than the dissent recognized and that the result reached by the majority is consistent with comity in view of the fact that State sovereign immunity prevents states from being sued by tribes. Justice Sotomayor also pointed out the special challenges that tribes face with respect to raising revenue and the role that their commercial enterprises play in funding government.

The unmistakable premise of the dissenting opinion, authored by Justice Thomas and joined by Justices Scalia, Ginsburg and Alito, is that sovereign immunity as currently exercised by tribes under the rule of Kiowa has led to widespread, grave and intolerable injustices. These injustices, according to the dissenters, warrant departing from the rule of stare decisis to correct the Court’s “mistake” in the Kiowa decision:

In Kiowa, this Court adopted a rule without a reason: a sweeping immunity from suit untethered from commercial realities and the usual justifications for immunity, premised on the misguided notion that only Congress can place sensible limits on a doctrine we created. The decision was mistaken then, and the Court’s decision to reaffirm it in the face of the unfairness and conflict it has engendered is doubly so.

Dissent, slip Op. 18.

Justice Thomas’ opinion highlights areas, including taxation, tobacco commerce, payday lending and campaign finance, in which tribes have “exploited” immunity to avoid state regulation. In a separate dissenting opinion, Justice Ginsburg expressed her view that the Court had gone too far not only in expanding the scope of tribal sovereign immunity in Kiowabut also in expanding state sovereign immunity from suits by tribes to enforce federal laws in Seminole Tribe v. Florida, 517 U.S. 44 (1996). Justice Ginsburg would impose greater limits on the immunity of both sovereigns.

The Court’s decision leaves unclear two areas of tribal sovereign immunity jurisprudence. First, the Court expressly acknowledged that it has never “specifically addressed” whether immunity “should apply in the ordinary way if a tort victim, or other plaintiff who has not chosen to deal with a tribe, has no alternative way to obtain relief for off-reservation commercial conduct. The argument that such cases would present a ‘special justification’ for abandoning precedent is not before us” Slip. Op. 16, n.8. The Court’s comment will be viewed as an invitation for a plaintiff to make the argument that this situation does indeed present a “special justification” for an exception to immunity.

The Court’s opinion also leaves unaddressed the extent to which tribal sovereign immunity applies to subsidiary entities. In a footnote, the dissent observed, without comment, that “[l]ower courts have held that tribal immunity shields not only Indian tribes themselves, but also entities deemed ‘arms of the tribe.’ … In addition, tribal immunity has been interpreted to cover tribal employees and officials acting within the scope of their employment.”

The consequences of the Court’s decision are likely to be (1) arguments by state lobbyists that Congress should take action to limit tribal immunity for the reasons set forth in the dissenting opinion and (2) suits based on the assertion that there should be an exception to tribal sovereign immunity for a “tort victim or other plaintiff who has not chosen to deal with a tribe” who has “no alternative way to obtain relief for off-reservation commercial conduct.”

Article By:

Brian L. Pierson
Of:
Godfrey & Kahn S.C.

Congress Renews Violence Against Women Act, Expands Tribal Court Jurisdiction

The National Law Review recently featured an article by Brian L. Pierson with Godfrey & Kahn S.C., regarding Recent Congressional Actions:

Godfrey & Kahn S.C. Law firm

On February 28, 2013 the House of Representatives approved Senate Bill 47, which reauthorizes and amends the Violence Against Women Act of 1994 (VAWA). The Bill, already approved in the Senate, became law when the President signed it on March 7th.

The VAWA is a major legislative achievement for Indian country. The Supreme Court held in 1978 that tribes lack inherent power to exercise criminal jurisdiction over non-Indians. For the first time since that decision, Congress has authorized tribes to exercise such jurisdiction. Title IX of the VAWA amends the Indian Civil Rights Act (ICRA) to permit tribes to exercise “special domestic violence criminal jurisdiction” over non-Indians who are charged with domestic violence, dating violence, and violations of protective orders that occur on their lands. Features of special domestic violence criminal jurisdiction include:

  • either the perpetrator or victim must be Indian
  • the tribe must prove that the defendant has ties to the tribal community
  • tribal jurisdiction is concurrent with state and federal jurisdiction
  • the defendant has the right to a trial by an impartial jury that is drawn from sources that –
    • reflect a fair cross section of the community; and
    • do not systematically exclude any distinctive group in the community, including non-Indians
  • In the event that a sentence of imprisonment “may” be imposed, the tribe must guarantee the defendant the enhanced procedural rights added to the ICRA by the Tribal Law and Order Act of 2010, including:
    • effective assistance of counsel, paid for by the tribe if the defendant is indigent
    • a legally trained judge licensed to practice law
    • published laws and rules of criminal procedure
    • recorded proceedings

Copyright © 2013 Godfrey & Kahn S.C.