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

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In a June 19, 2009 ruling from the United States District Court, Eastern District of Washington, in Pakootas v. Teck Cominco, Judge Lonny Suko held that Indian Tribes were not subject to CERCLA liability because they are not “persons” as defined under the statute.

In this action, defendant Teck Cominco Metals Ltd. (“Teck”), a Canadian corporation, brought a counterclaim against plaintiff Confederate Tribes Of The Colville Reservation (“Tribes”) for its alleged contribution of hazardous substances into Lake Roosevelt in Coulee Dam, Washington. The Tribes moved to dismiss the counterclaim, contending that they were not “person[s]” subject to liability under CERCLA, 42 U.S.C. Section 9607(a). This section imposes liability upon “person[s]” for costs incurred in responding to a release of hazardous substances. “Person[s]” is defined in Section 9601(21) as an “individual, firm, corporation, association, partnership, consortium, joint venture, commercial entity, United State Government, State, municipality, commission, political subdivision of a State, or any interstate body.”

In considering the arguments, the Court ultimately held that CERCLA’s definition of “person” is plain: it does not include “Indian tribes.” As the Court noted, CERCLA has existed for over 30 years, and Congress has had “adequate opportunity” to specifically include “Indian tribes” among the entities covered by the term “person.” The Court further noted that such an interpretation would not lead to an “absurd result.” While Teck argued that Tribes could “operate a dump for the disposal of hazardous substances, with complete impunity under CERCLA,” the Court stated that such a conclusion was of “dubious validity.” A tribe’s “disposal activities,” according to the Court, were otherwise subject to regulation under other federal environmental statutes, such as the Resource Conservation and Recovery Act (RCRA) and the Safe Drinking Water Act (SDWA).

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After months of anticipation, the IRS explained last week how tribes can take advantage of the new tax exempt Tribal Economic Development Bonds in its Notice 2009-51. Announcing a $2 billion volume cap, the IRS explained how it will allocate bond volume under IRC § 7871, and outlined the procedure and requirements for tribes to take advantage of the American Recovery and Reinvestment Act of 2009.

Most of the news is good. Traditionally, tribal governments have been hampered by the requirement that tax exempt bonds be used only to finance essential government functions. New § 7871(f) expands the scope of tax-exempt bond financed projects to most tribal economic development projects. Notably, the bonds may not be used to finance gaming facilities, or projects located outside of Indian reservations. The geographic requirement will prevent some tribes from being able to finance some off-reservation economic development, which will adversely impact those tribes with small land bases. That, however, might be the policy goal behind both the geographic requirement and the gaming exception.

Tribes need to have their applications in by August 15, 2009, to take advantage of the first $1-billion-tranche. The first allocation, of no more than $30 million per tribe, must be issued by December 31, 2010. In other words, those tribal governments wishing to take advantage of the Recovery Act should be filling out the bond applications now. Unless projects are relatively well-formed, it will be difficult to take advantage of the financing plan disclosure requirements.

Such financing plans must include:

• A reasonably detailed description of the plan of financing for the project, including all reasonably expected sources (e.g., a public offering through a named underwriter or a private placement to a named institution) and uses of financing, including financing from the Tribal Economic Development Bonds and from other sources;
• The status of all financing, including the name and addresses of all entities expected to provide any financing;
• The anticipated date of issuance of the Tribal Economic Development Bonds and any expected purchasers of the Tribal Economic Development Bonds;
• The sources of security and repayment for the Tribal Economic Development Bonds;
• The aggregate face amount of Tribal Economic Development Bonds expected to be issued for the project; and
• The issuer’s reasonably expected schedule for spending proceeds of the Tribal Economic Development Bonds.

Presumably, those tribes who have anticipated being able to take advantage of the first allocation will be positioned to provide the above information (and other required disclosures) ahead of the August 15 deadline. For those tribes who require more time, the deadline for the second allocation, which will include any amount of the first $1 billion in volume cap remaining, is January 1, 2010.

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The Oregon Supreme Court decided yesterday to allow a citizen group called People Against a Casino Town, or PACT, to proceed with its challenge of the Confederated Tribes of Coos, Lower Umpqua and Siuslaw Indians’ Class III gaming compact with the State of Oregon. See State ex. rel Dewberry v. Kulongoski (Order of June 18, 2009).

PACT brought suit in 2003 challenging the Oregon Governor’s authority to enter into a gaming compact with the Confederated Tribes. The compact allows the Tribe to open a Class III casino near Florence, Oregon. But the group argues that the Governor acted unconstitutionally in two ways. First, the group claims the Oregon Constitution prohibits the operation of casinos in the State of Oregon. Second, the group asserts that the Governor violated the state constitution’s separation of powers provisions. People Against a Casino Town, true to its name, seeks to void the compact between the Tribe and the state.

The Oregon Supreme Court affirmed the Oregon Appellate Court’s decision and remanded the case to the trial court for further proceedings to consider the citizen group’s mandamus action to void the compact. This decision, beyond generating protracted litigation, could give traction to similar suits in other states wherein state constitutions arguably prohibit state legislative or executive authorization of casino-style gambling as PACT argues Oregon’s Article XV, Section 4(12) does. Of course if People Against a Casino Town, or PACT, eventually succeeds, the case would curtail or terminate state-tribal gaming compacts in Oregon.
 

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In May 2005, Debora Juarez and I published an article in Indian Country Today titled, “Attracting Private Investment in Indian Country.” We wrote:

Tribal leadership has recently expressed some concern regarding the future of gaming and its governmental benefits. “Indian gaming will one day cease to exist,” Anthony Pico, Chairman of the Viejas Band of the Kumeyaay Indians from California was quoted as saying in a Reuters article aptly titled, “U.S. Indian tribes need to look beyond casinos.” Chairman Pico goes on to explain that the threatened expansion of non-Indian gaming, the over-saturation of the national gaming market, and public policy concerns about gambling addiction, are all factors that will sooner or later contribute to the demise of the $18.5 billion Indian gaming industry.

Chairman Pico’s wise foresight, from the perspective of California tribes who have operated governmental gaming operations since the 1970s, should be heeded by gaming tribes through the country. There were 15 gambling measures on the ballot in six states last November, which embody exactly the type of threat of expanded non-Indian gaming and market over-saturation that Chairman Pico speaks of. Fifteen states have conducted statewide prevalence studies on “problem gambling” and several states are considering legislation to combat gambling addiction, just as Chairman Pico eludes. As such, it is imperative that tribes expand their revenue sources beyond gaming and avoid placing all of their economic eggs in one basket.

Although some tribes have begun to devise ways to attract private investment and industry to the reservation, it has become more important than ever for Indian Country to create new economic opportunities that will withstand the volatile gaming market.

Even though Indian gaming has since grown to a $26.7 billion industry, the current global economic crisis and the resultant decline in may tribal casinos’ net revenues should cause Indian Country to increasingly “look beyond casinos.”

In 2005, a companion to our article was born: the Emerging Northwest Tribal Economies Seminar. The seminar, which was co-chaired by Lael Echo-hawk and I, was carefully designed to help inspire tribal leaders to look beyond casinos, and towards healthier, less politically volatile and perhaps more sustainable modes of tribal economic development. The seminar, which featured predominately Indian faculty members, was “by Indians, for Indians.”

Now half a decade later, we embark upon the 5th Annual Emerging Northwest Tribal Economies Seminar. On August 13 and 14, 2009, tribal leaders, business executives and advisors will again meet to teach, learn and discuss how to create long-lasting Indian economies.

Last year, consistent with notions of “buy Indian,” the seminar was moved from downtown Seattle to the Tulalip Resort Hotel in Quil Ceda Village, a federally-chartered municipality governed and operated by the Tulalip Tribes. The seminar returns to Tulalip again this year.

This year’s seminar, again co-chaired by Lael and I and as always “by Indians, for Indians,” will feature teaching and discussion of:

• Lessons from the Harvard Project on Economic Development
• Tribal Entity Formation & Protection
• Tribal Taxation Update
• Tribal Enterprise Financing
• Federal Appropriations Process: How Congress Can Aid Tribal Economic Development Efforts
• TERO Update
• Tribal Code Development & Entity Formation for Tribal Members
• Tribal Family-Formed Businesses
• Federal Contracting Opportunities for Tribal Small Businesses

For the first time, the seminar will feature a half day, on August 14, dedicated to issues of interest to individual Indian entrepreneurs and tribal small businesses, which are increasingly becoming a vibrant part of tribal economies and helping tribal governments look beyond casinos.

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Following up on their heralded May article regarding Indian self-insurance, Gabe Galanda and Jim Robenalt authored Part 2 of "Holding big insurance captive" in this week's Indian Country Today. Gabe and Jim delve even deeper into the homegrown risk coverage opportunities for tribes. Their first article generated a lot of positive feedback and questions, which are answered in Part 2. Forming tribally self-funded insurance and leveraging the significant private insurance cost savings is yet another way to strenghten and diversify Indian economies. Ask the Mashanucket Pequot Tribe, the Navajo Nation and the Blackfeet Nation, and the tribal equity owners of AMERIND. Let's hope the self-insurance trend continues throughout Indian Country.

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Division One of Washington’s Court of Appeals held Monday that sovereign immunity did not shield a tribe from a quiet title suit. Relying primarily on an implication of Anderson & Middleton Lumber Co. v. Quinault Indian Nation, 130 Wn.2d 862, 929 P.2d 379 (1996), the court upheld jurisdiction over the Stillaguamish Tribe in Smale v. Noretep reasoning that sovereign immunity is not bar to a state court’s exercise of jurisdiction over in rem proceedings.

The Smales filed an action to quiet title to property they claimed they had
acquired through adverse possession and named Noretep, the original non-Indian owners, as defendants. After the suit was filed, Noretep deeded the disputed property to the Stillaguamish Tribe. The Smales then named the Tribe as a defendant in their quiet title suit. The Tribe asserted its sovereign immunity and moved unsuccessfully to dismiss based on a lack of subject matter jurisdiction.

The court held that the Smales’ suit did not aim to deprive the Tribe of its land, because if the land had been adversely possessed, it had never actually become the Tribe’s land in the first instance. The Tribe had only taken what title Noretep had passed. More problematically, relying on the Anderson Court’s conflation of subject-matter and in-rem jurisdiction, Division One upheld the lower court’s assertion of jurisdiction. Relying on a statement from the Washington Supreme Court’s decision in Anderson that “sovereign immunity is of no consequence in this case because the trial court’s assertion of jurisdiction is not over the entity in personam, but over the property or the ‘res’ in rem,” 130 Wn.2d at 873, Division One appears to have been examining the matter in the personal, rather than subject-matter jurisdiction context. See Smale, FN 4 (“The action of the court is binding, even in the absence of any personal jurisdiction.”) Whether sovereign immunity bars a claim against a federally recognized Indian tribe is a question of subject matter jurisdiction over the claim. Wright v. Colville Tribal Enter. Corp., 159 Wn.2d 108, 111 (2006), cert. dismissed 550 U.S. 931 (2007).

Undoubtedly, future litigants will attempt to style their suits against tribes and tribal governments as actions in rem to avoid the full force of sovereign immunity (which is otherwise re-confirmed in Smale). But as one district court recently held, plaintiffs “cannot circumvent Tribal sovereign immunity by characterizing the suit as in rem, when it is, in actuality, a suit to take the tribe’s property. New York Oneida Indian Nation of New York v. Madison County, 401 F. Supp. 2d 219, 229 (N.D.N.Y. 2005). Even though tribes’ immunity from suit is a question of subject matter jurisdiction, tribes and their lawyers must closely examine whether there is real in-rem exposure in lawsuit. If Anderson did not explicitly undermine sovereign immunity before, the Smale court’s decision ensures that it does now.
 

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Williams Kastner’s Tribal Sports & Entertainment Team hosted the inaugural Tribal Sports Law & Business Conference – “Indian Country Goes Pro!” – in Seattle, on Friday, May 15th.

“Indian Country’s talented athletes and sports opportunities are widely ignored by society,” said Debora Juarez (Blackfeet), a member in the firm’s Seattle office and Chair of the Tribal Practice Group said. “Our tribal sports advocacy will encourage Indian people to use athletics to counter-attack challenges facing tribal youth like drugs, alcohol, gangs and teen suicide.”

The seminar’s keynote speaker was Tex Hall, former Chairman of the Three Affiliated Tribes, who has been inducted into the North Dakota Amateur Basketball Hall of Fame, the National Indian Athletic Association Hall of Fame, and the Minot State University Bottineau Athletic Hall of Fame. “The door has never been opened wide enough for Indian athletes,” Chairman Hall said. “Indians can't get to the pros competing in places like Bismarck, North Dakota. Unless our youth have financial backing, they won't make it.” He issued a clarion call for Indian Country to create larger platforms for reservation athletes, primarily through financial support.

In Hall’s honor, Williams Kastner donated all proceeds of the event to the Native American Basketball Invitational (NABI). Hall is a NABI Board member.

Other speakers included: Gina Northover-Moore, owner of Indian Rodeo News, on Indian rodeo promotions; GinaMarie Scarpa and Gyasi Ross (Blackfeet), both of NABI, on NABI’s inspirational efforts; Justin Ruggieri, in-house counsel for the Tohono O’dham’s Desert Diamond Casino, on tribal athletic commissions; and Randy Aliment and Anthony Broadman of Williams Kastner, on tribal sports agency and franchise ownership, respectively.

Each speakers’ words and images were captured via a live blog at https://twitter.com/IndianSports.