Economic development is one of the most important issues facing Indian nations today. Politically, it speaks to a tribe’s fundamental right to development, which is closely linked to its right of self-determination. Socio-economically, it is the means by which a tribe seeks to confront the enduring consequences of poverty. Culturally, it offers a pathway to preserving and enhancing indigenous worldviews.
Indigenous land-based economies sustained millions of Native Americans for thousands of years before the arrival of the Europeans. Contact with the Europeans altered the form of some of these economies, but also led to new avenues of trade and commerce. Over time colonial disease, warfare, and the plundering of Indian lands and resources took their toll on indigenous economies. Next came two and a half centuries of U.S. Indian policies that sought to destroy the customs, laws, and institutions that supported these economies.
The latter part of the 20th century, however, ushered in a new era of federal-tribal relations with the emergence of the policy of self-determination. With a new emphasis on tribal control of resources, land, and government, sustained economic development for Indian nations was once again possible. Today, tribes are engaging in a range of domestic and international initiatives as a means of rebuilding their economic bases. While the long-term effects of this development are yet to be fully realized, short-term indicators suggest socio-economic gains for tribes, as well as off-reservation local, state, and federal economies.
Yet even with these advances, there exist variations in the rates and levels of economic recovery among tribes. A number of non-legal factors affect long-term economic growth, such as institution-building, strategic planning, and access to capital. Additionally, the unique legal status of tribes has resulted in a set of complex rules that impact development efforts. While these legal rules can result in development advantages for tribes, this is not always the case. There exists an important legal hurdle to sustained development: U.S. Supreme Court cases that create jurisdictional uncertainties regarding the scope of tribal sovereign powers. How Indian nations might minimize the development impact of these decisions is an important and critical issue for tribal leaders.
Sovereigns seeking to provide for their constituencies exercise several key prerogatives, such as the power to tax, the authority to regulate, the right to be immune from suit without consent, and the ability to provide a forum for the adjudication of disputes. Tribes retain significant powers in each of these areas, but the last 25 years of Supreme Court jurisprudence has resulted in a morass of legal rules that make it difficult to predict just how far those powers extend.
Tribes as sovereigns
During the early years of self-determination, the Supreme Court advanced a rather robust definition of tribal sovereignty. As self-governing political entities, tribes retained all the attributes of sovereignty that had not been limited by treaty or federal law. The powers of states to exercise jurisdiction in Indian country were generally limited by the primacy of federal law and principles of tribal sovereignty.
However, beginning in 1978 with the decision in Oliphant v. Suquamish Indian Tribe, the U.S. Supreme Court introduced a new set of rules limiting the scope of tribal jurisdiction within Indian country. In Oliphant, tribal authorities arrested two non-Indian residents of the Port Madison Reservation for crimes committed on the reservation. The Suquamish Indian Tribe sought to prosecute the two individuals under tribal law. The Supreme Court ruled that the Suquamish Indian Tribe had been implicitly divested of criminal jurisdiction over non-Indians as a result of its “incorporation into the United States.” While the case was limited to criminal jurisdiction, it marked a fundamental shift in the Court’s interpretation of the rights of tribes as sovereigns.
During the 1980s and 1990s, the Supreme Court decided a series of civil cases that further muddied the jurisdictional waters, imposing new standards for determining when a tribe could exercise regulatory or adjudicative power over nonmembers located within its territory. They also created legal barriers to tribal economic development.
Regulation, taxation and tribal sovereignty
The United States Supreme Court stated in Merrion v. Jicarilla Apache Tribe that “the power to tax is [an] essential attribute of Indian sovereignty because it is a necessary instrument of self-government and territorial management.” This statement holds true for a host of other tribal regulatory powers, such as land use, zoning, and environmental protection. Yet the Supreme Court has failed to adopt clear rules regarding the rights of tribes to control activities within their territories. For instance, while tribes retain broad authority to regulate tribal lands, reservation lands held by nonmembers invoke a different set of jurisdictional rules. Ostensibly, a tribe has the power to regulate the activities of nonmembers when they have entered into a “consensual relationship” with the tribe or when they undertake activities that affect the “political integrity, the economic security, or the health or welfare of the tribe.” This test arises from Montana v. United States, in which the Court held that a tribe lacked regulatory authority over reservation lands held in fee by non-Indians unless one of the two criteria articulated above was met. The Montana standard law has resulted in an “unstable jurisdictional crazy quilt” of the Supreme Court’s own making.
Given the Court’s opinion in Montana and its reasoning in several other cases, tribes no longer retain the full panoply of sovereign powers over their territory, but rather are subject to a set of complex jurisdictional rules that create a host of legal, economic, and political problems. Consideration must be given regarding how these decisions might impact tribal economic development, and what tools are available to the tribes to mitigate or deflect their negative affects.
Sovereign Immunity: Impact on tribal economic development
Sovereign immunity is justified, in part, on the theory that protection of the public treasury from unlimited exposure to liability helps to ensure a well-functioning government. Forcing broad-based waivers of immunity any time a tribe “take[s] part in the Nation’s commerce” would have the opposite effect, subjecting it to potentially crippling liability. The Kiowa Court (Kiowa Tribe of Okla. v. Mfg. Technologies, 1998, which although held in favor of the Indian government, articulated an apprehension regarding the exercise of sovereign immunity), and others who support such a change in the law, fail to understand the important connection between tribal self-governance and tribal enterprises. Tribal governments are responsible for providing services to their constituencies, such as health, education, law enforcement, and housing, to name a few. Most sovereigns levy taxes to pay for these essential governmental functions. Yet the broad array of taxes available to state and local governments are not as readily available to tribes. Indeed, cases such as Atkinson Trading Co. v. Shirley, which limit a tribe’s ability to tax non-member commercial enterprises located within the reservation, can be seen as restricting a tribe’s ability to raise governmental revenue through taxation. Thus, tribes have had to rely on other revenue streams to meet their governmental responsibilities, most notably commercial enterprises.
The existence of the right of immunity, however, does not foreclose the possibility of waiver. Indeed, the trend has been toward limited waivers of tribal immunity as a means of stimulating economic development. The key factor here is that tribes – and not the federal government or courts – are determining the appropriate scope of the waiver based on individual tribal circumstances.
The cases dealing with regulation and taxation raise another important challenge for tribes: how to develop a comprehensive development strategy that allows the tribe to plan for the future. Land use and zoning are two good examples of how the scope of tribal powers may have a direct impact on a tribe’s ability to manage its resources effectively. For instance, if a tribe is found to lack zoning authority over certain portions of the reservation, as was the case in Brendale v. Confederated Tribes & Bands of Yakima, 1989, the integrity of its trust lands may be compromised. Moreover, since tribes cannot predict with any certainty how a court might apply the Montana test, comprehensive land use planning is very difficult to undertake. Similar problems arise in the area of taxation. For example, a tribe will be hampered in its ability to establish a comprehensive tax code if it is uncertain to what extent a state can tax the same subject matter. Additionally, uncertainty with respect to tax liability can create economic disincentives for businesses wishing to pursue development with tribes.
Tribal development by agreement
One means of addressing the uncertainties created by these myriad Supreme Court opinions is through cooperative agreements. While the idea of cooperative agreements is not new, it is worth revisiting in light of increasing development activity and increasing legal complexity.
In the area of taxation, cooperative agreements with states can reduce the level of uncertainty, both in terms of the tribe’s power to tax and the level of taxation sought by the state. There are a number of models to draw upon. As recently as 2001 there were some 200 voluntary tribal-state agreements addressing a range of taxation issues. These agreements have been structured differently depending on the type of tax at issue and the concerns raised by the two sovereigns regarding the tax. Not surprisingly, most of the agreements address non-member taxation in such areas as sales, use, cigarette, tobacco, liquor, and motor fuel taxes. The agreements fall into three general categories, with some variations: (1) a tribe agrees to tax at the same level as the state and then retains the proceeds; (2) a tribe agrees to tax at the same level as the state and then divides the tax between the state and tribe (based on an estimated percentage of sales to non-Indians v. Indians); or (3) the tribe agrees to collect some percentage of tax on non-Indians for the state.
As alluded to above, one final area where tribes may consider using agreements to address legal uncertainty is sovereign immunity. Partial waivers of immunity can be helpful to tribes as a means of attracting new development. However, whether and to what extent a tribe has waived its immunity will depend on the terms of the agreement. Further, waivers need to be “clear and unequivocal” to be enforceable, the Supreme Court recently concluded (C & L Enterprises, Inc. v. Citizen Band Potawatomi Indian Tribe of Okla., 2001). Thus, it is important for tribes to state clearly both the existence and extent of any waiver. Limited waivers of immunity address Justice Kennedy’s concern in Kiowa that “undefinedn this economic context, immunity can harm those who are unaware that they are dealing with a tribe ? [or] do not know of tribal immunity ?” Yet a waiver by sovereign agreement is very different from one that is mandated by Congress or the courts. A tribe determines when the waiver is appropriate and to what extent. For reasons noted earlier, this is an important sovereign attribute.
Agreements of the type mentioned, that waive a tribe’s immunity against suit or require it to share power or revenue with another sovereign, may at first blush be perceived as a diminishment of sovereignty. However, these steps actually can enhance a tribe’s sovereignty in two key ways. An important benefit of conflict resolution by agreement is that it allows tribes to commence with the business of providing for their constituency, rather than become mired in protracted litigation. Moreover, for reasons previously discussed, both tribes and states may prefer the predictability created by agreement to the uncertainty created by U.S. Supreme Court decisions.
Exercising ‘de facto’ sovereignty
This latter point on the link between the exercise of sovereignty and tribal economic development is an important one. Research suggests that the exercise of tribal authority over lands and resources, coupled with the policy of self-determination, greatly improve a tribe’s chances for sustained economic development. This exercise of authority has been referred to as “de facto sovereignty,” as opposed to “de jure sovereignty,” which is subject to the changing tides of the Supreme Court.
The experiences of individual tribes during the last 30 years support this conclusion. Chief Phillip Martin, of the Mississippi Band of Choctaw Indians, notes that “[t]he Choctaws’ ability to exercise our sovereignty, to operate our own tribal government and to work in conjunction with the local, county, state, and federal governments on a government-to-government basis” were crucial factors in the tribe’s economic revitalization. Tribal Representative Ray Halbritter of the Oneida Indian Nation makes a similar point in his discussion of the “practical value” of Native American sovereignty in rebuilding Oneida society and culture:
We have empowered ourselves in a way that cannot be denied, and in a way that allows us to do things for our people that we have been unable to do for centuries ? I believe that such empowerment is more than just a statement of sovereignty, it is sovereignty, and we have established that sovereignty without waiting or depending on other people to define what that term means. Whatever ? the pronouncements of the Supreme Court, sovereignty to us is the power to act ? for ourselves.
Cooperative agreements with other sovereigns are an expression of de facto tribal sovereignty. These types of agreements send a clear message to those who fail to understand that when tribes engage in economic development or, in the words of Justice Kennedy, “take part in the Nation’s commerce,” (Kiowa, 1998) they do so as sovereigns. Moreover, cooperative agreements are an expression of the right of tribes to shape their own socio-economic future, which is an essential attribute of the right of self-determination.
Conclusion
Supreme Court decisions during the last 25 years have created jurisdictional uncertainties for Indian nations. These uncertainties have developmental consequences: most notably they create economic disincentives and interfere with tribal planning. Cooperative agreements may be one way to minimize these uncertainties and increase economic opportunity. Additionally, such agreements represent an exercise of “de facto sovereignty,” which is an important step in the development process.
Lorie Graham is an associate professor of Law at Suffolk University Law School in Boston, Mass., where she teaches courses on Indigenous Peoples’ Rights, Federal Indian Law, Property, and Human Rights. She is the former director of the Harvard University Native American Program and has been a visiting scholar at Harvard Law School and University of Massachusetts-Amherst.
