Northwest Indian Law & Business Advisor : Northwest Indian & Tribal Lawyer & Attorney : Williams Kastner Law Firm : Tacoma, Seattle, Portland

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On Wednesday evening, the President is scheduled to deliver his annual State of the Union Address before a joint session of Congress as the nation watches live on TV. The President delivers his address amidst an economic crisis which is compelling Americans to look to the President to provide specific and directed policy initiatives that will help create more jobs and bolster the country’s economy. After a severe and protracted defeat of the health care reform legislation, combined with the retirements of several key Democrats who were up for reelection in 2010, the nation is poised to hear solutions to real problems facing America’s families. In response, the President has announced that he will seek an immediate freeze on the federal budget as it relates to discretionary spending programs. The President will likely go into detail about this new initiative during his address as well as announce how he intends to pursue policies designed to spark the nation’s stalled economic engine.

As the President’s budget proposal currently stands, the federal budget would amount to $1.3 trillion for Fiscal Year 2010. At the end of 2009, the public-held debt stood at $7.5 trillion, and it is projected to double by 2020 if all laws and policies remain intact. The most recent report issued by the Congressional Budget Office indicates that the American economy will continue its slow climb out of the recession, with low job growth, stagnant growth in the financial markets, and elevated home foreclosures lingering. Federal sources of revenue are expected to increase slightly as several tax provisions expire in 2010, including the Economic Growth and Tax Relief Reconciliation Act of 2001, the Jobs and Growth Tax Relief Reconciliation Act of 2003, and the Making Work Pay tax credit. The $1.3 trillion budget that will be at the center of the President’s address includes $687 billion for national defense ($130 billion in 2010 and another $50 billion a year from 2011 to 2019 for the military operations in Iraq and Afghanistan) and $562 billion for non-defense programs.

The reductions recommended in the President’s budget include discretionary spending in energy (48.8% reduction); education, training, employment, and social services (14.8% reduction); and natural resources and the environment (7.4% reduction). Many federal programs supporting American Indians are discretionary spending measures and would likely be reduced per Obama’s new budget. Some programs which are completely eliminated or reduced under the President’s budget, as well as a list of government departments that will face steep budget reductions, include: public broadcasting grants, the Department of Agriculture, public telecom facilities, the Department of Commerce, rural community facilities, the Department of Health and Human Services, state grants given to establish safe and drug-free schools and communities, the Department of Education, water infrastructure earmarks, the Environmental Protection Agency, work incentive grants, the Department of Labor, and targeted funding for Alaska Native Village infrastructure, ($9 million reduction).

Ultimately, Congress must take into consideration the current economic situation when debating the proposals set forth in the President’s address. Lawmakers will enter the appropriations process with some sobering facts and a policy proposal which will likely force them to play with the hand they have been dealt.

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Health care, in this session of Congress, is not likely to fare well. Speaker Pelosi has stated that there is virtually no way to gather enough votes for the House to pass the Senate version of the health care reform bill before the mid-term elections. This essentially means that the health care reform initiative as it currently stands is likely to be dead before arrival. However, it appears that after the election of Senator Brown in Massachusetts, the President is seeking to seize upon voter frustration with in the typical standoff between Democrats and Republicans which results in lack of progress in our nation’s capital. The President announced that he would seek further regulation of Wall Street financial institutions in the form of imposing new restrictions upon banks engaging in proprietary trading. Congress will likely have to review and amend legislative initiatives currently being deliberated in order to accomplish the President’s new focus upon strengthening regulatory mechanisms over Wall Street’s financial institutions.

On January 28, 2010, the Senate Committee on Indian Affairs will conduct a hearing on proposing solutions to the high unemployment rates on Indian reservations. Yesterday, the House approved three water rights bills: H.R. 1065, H.R. 3254, and H.R. 3342. The direction of Indian country priorities will likely face shifting political emphasis after the State of the Union address and submission of the President’s budget.

Washington Legislature

The Washington Legislature continues to face mounting challenges in order to balance the state’s $31 billion budget. The source of state revenue continues its decline as the economy suffers through job losses in 2009 that reached 106,000. The forecast for the state’s economy shows that there will continue to be slow recovery, stagnant job growth, high unemployment, and less revenue collected. The state will be reliant upon Federal sources of funding and will be forced to implement policies that expand job opportunities and investment in state business development. Some notable bills to monitor include the following:
HB 2411: A bill to address subarea plan proposals as part of comprehensive land use planning.
HB 2493: A bill to address the taxation of cigarettes and other tobacco products.
HB 2749: A bill to address local government taxation. HB 2650: A bill to address utility taxes.
HB 1191: Incentives to support renewable solar energy. HB 1610: Incentives for use of biomass in renewable energy production. HB 1658: Incentives for utilities to promote renewable energy.
HB 1699: Implementing a high-speed internet deployment and adoption strategy for the state. HB 1249: Concerning internet and mail order sales of tobacco products.
 

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The next ten months will be very interesting as Congress deliberates after the President’s State of the Union Address. The balance of power has been impacted in the Senate as the Democrats hang on to a 59-seat majority with a Republican margin of 41 seats. The mid-term elections for Congress are scheduled for November 2010 and in the meantime Congress will address the federal budget, debate any jobs related policiesand determine the future of the health care reform bill. The position and the discussion that will ensue during the next ten legislative months will likely set the tone and agenda for issues which will be used by voters in determining their elected officials. The following information is a brief synopsis of a few of the key gubernatorial and congressional races in the western United States.

Washington

There is no scheduled gubernatorial race for Washington state in 2010 as current Governor Christine Gregoire’s term does not expireuntil 2012. In the Senate race, Senator Patty Murray is seeking reelection in 2010 and has enjoyed broad support from Democratic voters in the state. Sean Salazar, a chiropractor, and Wayne Glover, a trucker, have announced that they will challenge Senator Murray in the upcoming election on the Republican ticket. Some Republicans areintending to mount a serious challenge to Senator Murray by mobilizing voter turn-out and by encouraging high profile candidates such as Attorney General Rob McKenna or 8th Congressional District Representative Dave Reichert to enter the race.

Idaho

The Republican incumbent Governor C.L. “Butch” Otter is set to mount a reelection campaign in 2010 on favorable polling numbers. The challenger, Keith Allred, is a political novice when it comes to electoral politics and will face an electorate that is known for supporting conservative, Republican candidates. In the Senate, Senator Mike Crapo is seeking reelection in 2010 and has yet to see a serious challenge from the Democrats in Idaho.

Oregon

Former Governor John Kitzhaber is a favored candidate on the Democratic side of the ticket and he faces a challenge in the primary by former Secretary of State Bill Bradbury. The Republicans have several candidates which include Allen Alley, Bill Sizemore, and former State Senator John Lim. In Oregon’s Senate race, Senator Ron Wyden is seeking reelection in a heavily leaning Democratic state. Some Republican pundits have suggested that former Senator Gordon Smith would be a strong candidate to challenge Senator Wyden.

California

Jerry Brown has re-surfaced, again, as the Democratic candidate for Governor in the nation’s most populous state. The Republicans have some serious challengers among their candidates which include former eBay CEO Meg Ryan and State Insurance Commissioner Steve Poizner. Senator Barbara Boxer is seeking reelection for the U.S. Senate and faces a challenge from several high profile Republicans. Carly Fiorina, former CEO of Hewlett Packard; State Assemblyman Chuck DeVore; and former U.S. Representative Tom Campbell have all surfaced seeking the U.S. Senate seat for the Republicans.
 

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On January 19, 2010, there was a special election held in Massachusetts for the U.S. Senate seat vacated by the death of former Senator Edward M. Kennedy. The campaign for the vacant seat was marked by fierce political fighting within the Democratic party in order to craft a message which resonated with voters who are currently facing huge economic challenges, a burgeoning federal deficit, and widespread disagreement over the Obama Administration’s strategy to enact health care reform. The Republican party focused upon a candidate and a campaign which leveraged on voter anger at large Wall Street bail outs, high rates of unemployment, and potentially large deficit spending to accomplish health care reforms. Senator-elect Brown gathered 51.9% of the vote compared with the 47.1% accumulated by the Democratic challenger Martha Coakley. The election attracted voter turnout to the tune of 2.25 million people, which was about 73% of the total voters who turned out in the 2008 presidential election. The consequences of this election are significant, as the Democratic Party has lost its supermajority of 60 seats in the U.S. Senate, an advantage that allowed votes to be conducted on a party line basis and limited Republican filibusters.

The legislative agenda adopted by the Democratic leaders in Congress and the President is now largely at risk of being irrelevant in the remainder of the Congressional session leading up to mid-term elections in November 2010. The Administration and Democratic members of Congress will now likely be forced to appeal to moderate Republicans in the hopes of passing any legislation designed to address a wide range of issues including job creation, financial industry regulations and health care. For the time being, Democratic leaders have insisted that it is their intent to move the health care reform measure through Congress quickly. Some members of the House have indicated that they will adopt the Senate version of the bill and attempt to gather the 218 votes needed to clear the House. In order to move the House-passed bill, the Obama Administration and Senate Majority Leader Reid (D-NV) would have to pass a corrections bill through Congress by using budget reconciliation procedures. Budget reconciliation procedures only require 51 votes to pass a bill.

The health care reform debate may begin anew if the House cannot agree to adopt and pass the Senate version of the bill. The focus of the Administration and Congress may subtly shift to engaging on public policy debates to shore up an ailing economy and provide a responsive set of policy initiatives designed to increase jobs. The economic downturn which has resulted in sustained unemployment at levels not seen since the Great Depression is only adding to the desire of many politicians seeking reelection in 2010 to address employment and job issues. The upcoming State of the Union Address by the President will likely be the Democrats first opportunity to unveil any new economic and legislative initiatives. The Republican Party may be poised to gather more seats in Congress in the 2010 elections by focusing upon progressive policies tailored to improve the economy and spearheading efforts to ensure that Americans return to the workplace at a higher pace.
 

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On January 12, 2010, Governor Christine Gregoire delivered the State of the State address to the 61st Washington State legislative session. This year’s legislative session is slated to be a 60-day session that will likely be marked with frenzied activity and decision making that will provide deep cuts to an already deficit laden budget. The supplemental budget proposed by Governor Gregoire in December 2009 requested reductions in government services or programs to patch an expected $2.6 billion gap in funding. At the opening of her address, the Governor acknowledged all of Washington’s tribal leaders and recognized those in attendance including: Carol Hatch, Chairperson of the Quileute Tribe; Charlotte Williams, Chairperson of the Muckleshoot Tribe; and Mel Sheldon, Chairman of the Tulalip Tribes. Chairman Brian Cladoosby, Swinomish Tribe, gave the opening prayer to the address where he emphasized a humble and gentle approach to governing during this session of the legislature since many of Washington’s families are struggling to survive in the state’s depressed economy.

The Governor’s address focused upon the challenging economy and the difficult decisions ahead while asking for the legislature to have compassion when adopting legislative policy to implement cuts requested in the budget. The Governor sharpened her pledge to have a leaner and efficient government bureaucracy where she would reduce the size of the state government agencies by one-third and eliminate an additional 78 boards and commissions. In addition to bureaucratic reductions and eliminations, the Governor stated that it was the creation of jobs which would bring the state out of the current recession. Governor Gregoire suggestedthat adopting public policy in renewable energy, health care, technology, biotechnology, education, and public safety showed promise in developing jobs and securing the future economy of the state. Although the specifics of each public policy area were not detailed in her address, the Governor indicated that she would support a tax credit for small businesses that hire new employees, spur business development in renewable energy industries through infrastructure investment in the smart electrical gridand the streamlining of government permitting programs. Collectively, it is hoped that these measures will result in the creation of 40,000 new jobs with a commitment of $2 billion in capital investment from non-state government sources. Tribal businesses, tribal entrepreneurs, and other businesses wishing to do business in Washington should be formulating a position on these economic policies.

The Senate Ways and Means Committee began receiving testimony today on the proposed supplemental budget and will likely move the measure forward in an expeditious manner in the shortened time frame provided by this legislative session. The state budget along with the other measures introduced in this legislative session will set the tone and pace for Washington’s programs and policies for many years to come. The state’s economic and natural resources are facing a tough financial reality for the immediate future. Now is the time for state policy to incorporate tribal economies into the equation of developing and expanding opportunities to generate revenue and jobs in the state. The advantages of doing business with Washington’s tribes should be a factor when the state legislature is looking to offer incentives when attracting capital investment and business activity.

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On December 8, Secretary of the Interior Ken Salazar and Elouise Cobell jointly announced that the United States and Cobell plaintiffs had entered into a settlement agreement to conclude the decades-old Cobell litigation. The case was filed in 1996 on behalf of a class of Indian plaintiffs who had Individual Indian Money (IIM) accounts managed by the Department of the Interior. The plaintiffs sought remedies against the United States resulting from breaches in the management of IIM accounts. Among other things, the Cobell plaintiffs sought an accounting of the trust corpus to determine its value.

The settlement requires the creation of: (1) an Accounting/Trust Administration Fund with an infusion of $1.4 billion to settle individual Indian claims; (2) a Trust Land Consolidation Fund with an infusion of $2 billion; (3) a Secretarial Commission on Trust Reform paid for by money in the Trust Land Consolidation Fund; and (4) a mechanism for unused funds in the settlement to be set aside for Indian education scholarships. The settlement does not require the federal government to admit fault and it resolves all individual Indians’ IIM-related claims that have or could have accrued as of the date of the settlement.

Importantly, the settlement is contingent upon Congress enacting legislation to approve the settlement, including the appropriation and payment of federal funds under 31 U.S.C. § 1304. The timeline allotted in the settlement agreement for Congress to do so is extremely ambitious since it anticipates congressional authorization by December 31, 2009. While Congress debates the highly controversial health care reform legislation, Senator Reid and Speaker Pelosi will be hard pressed to schedule time for authorization of a multi-billion dollar settlement before recessing at the end of the year.

Of significance, there is no language in the settlement or the legislation that appears to resolve the tribal trust mismanagement cases, including the one-hundred plus cases filed by tribal governments in addition to the Cobell litigation, which are pending before various federal courts. The tribes’ cases, according to former Attorney General Alberto Gonzales in 2005, could result in liability to the United States in excess of $100 billion.

Tribes and individual Indian allottees must carefully scrutinize the $2 billion set aside for land consolidation pursuant to the Indian Land Consolidation Act. The consolidation would seek to consolidate all 128,000 individual Indian allotments into an Indian-owner-managed trust that could include tribal governments as owners in common with individual Indians. The Secretary would be authorized to use fair market value to consolidate the estimated 3.6 million fractionated Indian land interests, into what the federal government appears to believe would be a more efficient and beneficial owner-managed trust.

The proposed Secretarial Commission on Trust Reform is not fully detailed in the settlement or the proposed authorizing legislation. There are reports that this Commission would somehow “sunset” the Office of Special Trustee (OST), but there is not operative language that would make this a reality. Unless the role and the authority of the Commission are detailed in the legislation, there is always the possibility that the Commission will be just another bureaucratic creation with no mission other than to amorphously serve as “trust reformer.” At a minimum, it seems appropriate that when discussing trust reform, the legislative initiative should follow a tribal-driven set of recommendations, similar to that undertaken in the 109th Congress with S.1439.

The three-week timeline for Congressional approval of the Cobell settlement is extremely ambitious, but should nonetheless cause tribal governments and Indian allottees to think twice before supporting or rejecting it outright. Indian Country must demand that key issues related to any consolidation of Indian land interests or reformation of the federal/tribal trust relationship be completely explained, before Congress does anything, whether by December 31 or afterwards.
 

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While many tribal consumers have a vast array of opportunities to access the seemingly unlimited information on the Internet, many Indian consumers still do not have access to traditional telephone lines for dial-up Internet connection. The gap in access results from the remote location of Indian reservations, and the high cost of running line to homes and businesses there. Broadband services and applications present a solution that could bridge this connectivity gap in Indian Country.

A Wall Street study recently cited by the FCC in a report on wireless broadband access found that consumers increasingly rely upon wireless devices and applications to access the Internet to complete commercial transactions and gaming activities. Tribal governments and entrepreneurs and Indian Country’s other capital investors should focus on developing wireless broadband access on reservations in order to reach tribal consumers and further inject commerce into tribal markets. Indian Country most certainly has the land base, population and energy resources needed to positively impact the Internet network and become a member of the Internet Protocol for transmission of data via the Internet.

One area that should be developed in Indian Country are mesh and edge networks, otherwise known as server farms, which store content for access by end users. The stored content and deployment of high speed fiber optic links connecting various servers to a central database will prevent congestion at choke points in the Internet. This allows the end user to access content and information at faster and more reliable speeds. Server farm projects could be developed using a mixture of tribal, private and federal Recovery Act funding. Tribal entities that become Internet service providers (or “ISPs”) should also explore setting fees for use of the Internet network based upon tiered access. Tiered access would allow a flat fee for a certain level of Internet traffic per month, but impose additional fees for access to extra bandwidth needed to transmit higher volumes of data over the Internet.

The network neutrality debate happening before the FCC is also key for Indian Country. The FCC regulates ISPs as informational service providers, not common carriers. As the FCC has ancillary authority to regulate ISPs, market forces impose conditions, rates and terms upon ISPs’ delivery of Internet access to end users. While an open market should encourage tribal development of ISPs, there are open questions regarding the extent, nature and scope of state regulatory authority of ISPs operating within Indian Country. The federal Communications Act reinforces the view that states have an important and preeminent role in regulating intrastate communications. I fear that if the FCC decides that ISPs are common carriers, rather than informational service providers, such may inadvertently cause state regulation over Tribal ISP transactions occurring on tribal lands within a particular state. Tribal advocates must focus on the net neutrality debate insofar as state, and thus tribal, regulatory authority over Internet communications are concerned.

In sum, Indian Country and potential tribal ISPs can and should seek to influence federal policy by or through advocating for tax incentives to develop broadband capabilities in underserved reservation areas; establishing partnerships with current ISPs to take advantage of Internet-related business opportunities; and pronouncing a clear position on net neutrality and related regulatory issues to the FCC and other policymakers.

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The Washington State Bar Association Board of Governors has been asked to consider adopting the Uniform Bar Examination (UBE), on shortened time, casting doubt on the future of the current Washington State-specific admissions exam. It appears that an October 13, 2009 internal WSBA report urging reform of Washington’s bar exam, could be acted on by the Board as early as January 2010.

The last substantive change to the exam, namely the Board’s decision in October 2004 to add federal Indian jurisdiction to the test, culminated from 2 ½ years of deliberations amongst and between various WSBA stakeholders. With that in mind, the proposed reform effort seems to be moving too quickly to allow time for the Board and entire state bar to fully consider how the reform might impact, e.g., Washington’s three law schools; civil legal aid in our state; the diversification of our state bar, and above all, the competence of Washington lawyers and the integrity of our profession.

In 2004, the BOG considered all of these questions relative to Indian law, concluding its addition would positively impact, inter alia, the provision of indigent legal aid, the diversification of our bar, and lawyer competence. See “Bar None! The Social Impact of Testing Federal Indian Law in Washington,” Washington State Bar News, August 2007. By letter to the WSBA Board and local law school deans, a slower, more deliberate bar exam reform process has been urged, which will allow these types of issues to be fully vetted, with the full participation of all interested WSBA parties.

If some form of local bar exam reform is eventually believed to be in the Washington public’s best interest, at least one state-specific day of testing should be maintained, and Indian law should either be left as its own topic or included in state-centric civil procedure, contracts, torts and/or other topics. As University of New Mexico Law School Professor Gloria Valencia-Weber writes: “Ultimately, each state, its history, and its contemporary circumstances provide the basis for why familiarity with Indian law can strengthen the knowledge that licensed attorneys use to serve their clients and the public interest.” In 2004, the WSBA decided that Washington’s history and contemporary circumstances, including historical and modern tribal-state relations, compelled the addition of Indian law to our exam. We can ill afford to lose sight of Indian law as part of that which makes us the Washington State Bar Association.

For information about efforts nationwide to include Indian law on state bar exams, visit Turtle Talk.
 

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The free market that is the Internet is a primary universal gateway for commercial transactions, including those in Tribal economies. The Internet provides access to Indian Country patrons and customers and may be the only way to reach rural Indian businesses. The free market created and maintained by the Internet could soon be a federally regulated digital environment where rates will be charged for data transferred on the Internet and restricted network access.

Domestic telecommunications policy within the United States has until now encouraged the largely unregulated expansion and modernization of Internet systems and applications to allow ready public access for commercial and other purposes. Yet now, telecommunications companies are stirring up a policy debate that could allow these entities to charge rates for data transmission based on the bandwidth used. Essentially, users would be forced to pay for access for all data transmitted via the Internet. Telecommunications companies are advocating a tiered pricing system, based on the bandwidth being used--a strategy which could lead to segregated pricing based upon content of the data being accessed or type of users accessing the data. The concept of pricing based upon content and users could be the next battleground in strategic competition for access to the broad markets provided by an open Internet.

The counter position is known as net neutrality--the advocates for which hold the position that the Internet must remain open and accessible. Net neutrality proponents fear that segregation of Internet data or access will impede a free market. In particular, they predict severe negative commercial effects if Internet access is regulated by the federal government, restrictions are placed on network performance by telecommunications providers, and/or users are assessed connection speed charges, Universal Service charges, or tiered charges based upon data or content transmission.

On October 22, 2009, the Federal Communications Commission entered the debate and issued a proposed rulemaking regarding Internet access. Under the federal Communications Act of 1934, as amended by the Telecom Act of 1996, Congress detailed an Internet policy rooted in preserving and further developing the vibrant and competitive free market that exists via the Internet. Through its proposed rulemaking, however, the FCC could set regulatory standards for, among other things, various pricing for access to the Internet.

In light of this debate, which will have enormous ramifications, tribes and businesses should begin to formulate strategic economic development plans that call for the creation of Internet Service Providers, Exchange Service Providers, broadband capabilities, and cable television ventures providing services to Indian communities and businesses. Before broadband capability has even reached all of Indian Country, tribal access to the Internet–and the commercial opportunity it brings to reservations–could soon be significantly restricted by federal policy and by telecommunications providers who seek to control the Internet. That is, unless tribal governments and businesses focus on this debate and begin exercising Indian Country’s political muscle. Tribes must actively monitor the FCC’s proposed rulemaking and the overarching net neutrality policy debate; better yet, tribes should comment on the rulemaking, which is available on the FCC’s web-site.

Indian Country can ill afford to be left on the other side of the digital divide.