Connecticut District Court Resucsitates Bracker Balancing and Tax-Free Native-to-Native Commerce

On March 27, 2012, the U.S. District Court for the District of Connecticut ruled that a local government could not assess personal property taxes against Class III slot machines. The decision in Mashantucket Pequot Tribe v. Town of Leydard is here and related news coverage quoting Gabe Galanda is here. Beyond the court's specific holding, which represents a scarce tax win for Indian Country of late, the decision stands to rebuff an increasingly common arguments by states in justification of state taxation of Native-to-Native or Reservation-to-Reservation commerce. Due to Congress' preemption of the Indian gaming field and clear prohibition on state taxation of Indian gaming, per IGRA, the decision affirmed what was widely believed to be the law: that is, that states and local governments cannot assess personal property taxes against Class II or III gaming devices. Of broader significance, the Connecticut District Court's decision in Leydard stands to defeat arguments increasingly advanced by state tax assessors that to the extent Indians traverse state-funded highways in trading goods or engaging in commerce from Reservation to Reservation, states can tax those activities.

Last year, the Tenth Circuit Court of Appeals ruled that state roads traversed by non-Indian extraction companies while taking oil and gas to market represented a “substantial” state interest. That interest ultimately tipped the Bracker balancing away from tax preemption, in favor of the state, and gave more state tax collectors even more reason to argue that state roads represent a so-called state burden that justifies state taxation of Reservation-to-Reservation commerce.

But in Leydard, the District Court rejected such an argument on the part of the township:

The maintenance of the roads to the Reservation has some connection to the taxed activity because the leased gaming equipment was brought onto the Reservation by way of the roads and the individuals who use the gaming equipment also use the roads to the Reservation. However, even if the Tribe did not lease the gaming equipment, the Town would need to maintain roads to provide access to the Reservation for individuals living on and off the Reservation. Thus, the State and Town’s interest in taxing the leased equipment fails to justify the economic burden on the Tribe that compromises substantial federal and Tribal interests in tribal self-determination and self-government pursuant to comprehensive federal regulation. The tax is preempted pursuant to Bracker balancing.

In all, the Leydard decision helps tip the Bracker scale back in favor of Indian Country, especially as to tax-free Native-to-Native or Reservation-to-Reservation commerce.

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  Gabe helps tribes and Indian small businesses with economic diversification efforts, with an emphasis on minimizing state interference or taxation. Gabe can be reached at 206.691.3631 or gabe@galandabroadman.com.

Seattle Tribal Lawyer Anthony Broadman Publishes Local Taxation in Indian Country Article

Anthony Broadman has published a paper, "Know Your Enemy: Local Taxation and Tax Agreements in Indian Country," has been published in the inaugural edition of Seattle University's American Indian Law Journal.

Intergovernmental disputes between tribes and their neighbors have educated states about tribal sovereignty. What many state governments have learned, through litigation, political battle, and intergovernmental dispute, is that even when states have “won” tax disputes, they have lost. This dependably pyrrhic result has driven rational state actors—state taxing authorities acting consistently with their own best fiscal interests—to pursue negotiated agreements. Today, state-tribal tax compacts, while often controversial, are commonplace.

Counties and cities, on the other hand, with some admirable exceptions, have yet to learn, or heed, lessons from inter-local tax disputes. As it stands, tribes must be prepared for future battles over local taxation in Indian Country, particularly in regard to real or personal property owned by tribes. But as counties and municipal governments slowly learn the lessons already learned by the states, tribes should also be ready to negotiate intergovernmental solutions to inter-local tax disputes.

Anthony Broadman is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-owned law firm.  His practice focuses on company-critical business litigation and representing tribal governments, especially in federal, state and local tax controversy. He can be reached at 206.691.3631 or anthony@galandabroadman.com, or or via galandabroadman.com.

Gabe Galanda to Stump on Federal Indian Consultation at the Silver State Mining & Tribal Forum

Gabe Galanda will stump on the federal Indian consultation right at the 2012 Silver State Mining & Tribal Forum, via Skype to Winnemucca, Nevada on April 17, 2012. His remarks will focus on customary international law requiring consultation with and informed consent by indigenous peoples, as embodied in the United Nations Declaration on the Rights of Indigenous Peoples. In late 2010, Gabe published a three-part series in Indian Country Today titled, "The Federal Indian Consultation Right: No Paper Tiger." He has since been cited as a leading commentator on the topic of federal Indian consultation, in papers like "Tribal Consultation in the 21st Century" by Professors Colette Routel and Jeffrey Holth; and in the latest edition of Steven Pevar's book, "The Rights of Indians and Tribes."

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  Gabe helps tribal governments and Indians citizens defend against tribal and indigenous rights violations by federal, state and local government actors. Gabe can be reached at 206.691.3631 or gabe@galandabroadman.com.

Seattle Tribal Lawyers Galanda & Dreveskracht Publish "Tribal Court Litigation" Deskbook Chapter

This month, a chapter on "Tribal Court Litigation" co-authored by Gabe Galanda and Ryan Dreveskracht for an authoritative commercial litigation handbook, was published by the American Bar Association Business Law Section. The chapter appears in the 2012 edition of Annual Review of Developments in Business and Corporate Litigation. The breadth of the very complex Indian law issues covered by the chapter is suggested by its Table of Contents:

§ 27.1 Introduction to Transacting in Indian Country § 27.2 The Third Sovereign § 27.2.1 The Modern Erosion of Tribal Sovereignty § 27.2.2 State Regulation and Taxation, and Federal Indian Preemption § 27.3 Tribal Sovereign Immunity § 27.3.2.1 Scope of Tribal Immunity § 27.3.2.2 Waiver of Tribal Immunity § 27.4 Tribal Structures § 27.4.1 Tribal Corporations § 27.4.2 Tribal Courts § 27.5 Tribal Assets and Federal Approval § 27.4.1 Fee-to-Trust and Carcieri § 27.4.2 Federal Approvals § 27.6 Tribal Labor and Employment § 27.7 Federal Laws of General Applicability § 27.8 Federal Court Jurisdiction § 27.9 Tribal Court Jurisdiction § 27.9.1 Tribal Authority Vis-à-vis State Authority § 27.9.2 Tribal Exhaustion Doctrine § 27.9.2.1 National Farmers Union § 27.9.2.2 Exceptions to the Exhaustion Doctrine § 27.10 Conclusion

Consider the conclusion to the chapter:

Economic growth and development throughout Indian country have spurred many businesses to engage in business dealings with tribes and tribal entities. Confusion may arise during these transactions because of the unique sovereign and jurisdictional characteristics attendant to business transactions in Indian Country. As a result, these transactions have prompted increased litigation in tribal and nontribal forums. Accordingly, counsel assisting in these transactions, or any subsequent litigation, should conduct certain due diligence with respect to the pertinent tribal organizational documents and governing laws that may collectively dictate and control the business relationship.

To maximize the client’s chances of a successful partnership with tribes and tribal entities, counsel should ensure that the transactional documents contain clear and unambiguous contractual provisions that address all rights, obligations, and remedies of the parties. Therefore, even if the deal fails, careful negotiation and drafting, and in turn thoughtful procedural and jurisdictional litigation practice, will allow the parties to more expeditiously litigate the merits of any dispute in the event that the deal fails, without jurisdictional confusion. As business between tribes and nontribal parties continues to grow, ensuring that both sides of the transaction fully understand and respect the deal will lead to a long-lasting and beneficial business relationship for all.

Gabe served as the Editor-in-Chief of Annual Review for the 2007 through 2010 editions, and has co-authored the Tribal Court Litigation chapter each year since 2006. This is Ryan's first year co-authoring the chapter.

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  Ryan Dreveskracht is an associate with Galanda Broadman. Gabe and Ryan litigate various critical matters on behalf of tribal governments and businesses and individual Indians, in tribal, state and federal court.

AUTO v. Washington: Looking Into The Crystal Ball

When the Washington State Supreme Court ruled last month that states lack jurisdiction to prosecute tribal members for crimes on federal land that has been set aside for the exercise of treaty fishing rights, the court revealed more about its makeup and how we can expect future Indian law cases to be decided in Washington.  See State v. Jim, No. 84716-9, 2012 WL 402051 (Wash. Feb. 9, 2012) (en banc). Summaries based on voting records are necessarily binary.  However, if we treat them as one court-watching tool, and understand that every case is different, looking at how the Justices vote can be valuable – especially as we approach the day when AUTO v. Washington will be heard.  Consider the current Justices’ voting patterns in recent Indian law cases:

Case	Tribal Interests Prevail	Tribal Interests Fail
Wright v. CTEC	MadsenOwens Fairhurst	ChambersC. Johnson J. Johnson
State v. Eriksen	OwensC. Johnson Chambers	StephensWiggins Fairhurst Madsen J. Johnson
State v. Jim	OwensC. Johnson Alexander Stephens Fairhurst Chambers	WigginsJ. Johnson Madsen

Of the Justices who took part in all three cases, the common anti-tribal denominator is Justice Jim Johnson.  He has sided with the anti-tribal interests in each of the three cases we use as indicators.  Justice Wiggins was not on the Court for Wright, but he too has sided against tribal interests in Eriksen and Jim.  While Justice Madsen authored a concurrence in Wright, which affirmed tribal sovereign immunity for tribes’ commercial activities, she has recently joined Justices Jim Johnson and Wiggins in dissent against tribal interests in both Eriksen and Jim.

AUTO will provide a very telling fourth data set, with many of the same justices as well as newly appointed Justice Steven Gonzalez taking part.

Anthony Broadman is a partner at Galanda Broadman PLLC.  He can be reached at 206.321.2672, anthony@galandabroadman.com, or via www.galandabroadman.com.     

Gabe Galanda Encourages Indian Country to Utilize the UN Indigenous Rights Declaration in Domestic Struggle Against the United States

Gabe Galanda has published “Deploying the U.N. Indigenous Rights Declaration in the Courts of the Conqueror” in Indian Country Today. He explains:

On December 16, 2010, with much pomp and circumstance before American tribal leaders, President Obama endorsed the Declaration, explaining to the tribal leaders who had gathered in Washington, D.C.:

“The aspirations it affirms—including the respect for the institutions and rich cultures of Native peoples—are one we must always seek to fulfill…. I want to be clear: What matters far more than words—what matters far more than any resolution or declaration—are actions to match those words.”

Yet in action, the departments, agencies, and officials within the Obama Administration do not actually live up to the words contained in the Declaration. To the contrary, federal actions too frequently contradict the promises made by the United States to American Indian indigenous people in the Declaration. As United Nations Special Rapporteur on the Rights of Indigenous Peoples S. James Anaya has noted, it is one thing for governments to “incorporate the norms concerning indigenous peoples; it is quite another thing for the norms to take effect in the actual lives of people.”

After explaining how the Declaration might hold in United States courts, Gabe concludes: "Despite federal contention otherwise, the Declaration is not toothless. Indian country should deploy the Declaration and its embodiment of customary international law in domestic courts when necessary to defend against federal behavior that threatens American indigenous ways of life."

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  Gabe represents tribes and individual Indians in all matters of controversy with federal, state or local governments. He can be reached at 206.691.3631 or gabe@galandabroadman.com.

Turtle Talk Publishes Seattle Tribal Lawyer Ryan Dreveskracht's “Keeping Tribal Business Partners Close – and Their Lawyers Closer”

Ryan Dreveskracht's occasional paper, “Keeping Tribal Business Partners Close – and Their Lawyers Closer,” was published today by Turtle Talk, the leading blog on issues of federal Indian and tribal law, with the following editorial comment from Professor Matthew Fletcher.

I’m largely in agreement with Dreveskracht. When I started practicing in the 1990s, senior attorneys counseled me to draft contract language that would facilitate these kinds of traps. One example involved a private vendor that refused to adjudicate disputes in tribal court, insisting on state court jurisdiction and governing law. We negotiated for federal court review as a “compromise.” Of course, there is no federal subject matter jurisdiction over contract claims just because one of the parties is an Indian tribe. In California especially, cases started coming out in the 2000s where federal court judges were forced to dismiss contract claims, but the federal judges openly criticized tribal lawyers for negotiating those provisions. They frankly are borderline unethical, and may implicate professional responsibility canons.

Business partners are partners before they are adversaries, and tribal businesses depend on goodwill of their own businesses and those of other tribes to create a groundwork for doing business with non-Indian entities. It seems reasonable to rethink the arms-length negotiations strategies in at least some contracts. It may be a difficult pill to swallow for tribal lawyers. Well, face it, most just won’t do it. Lawyers are trained in an adversarial process, and always lean toward strictly assessing risk. Maybe that’s why lawyers are such lousy business people.

Ryan Dreveskracht is an Associate at Galanda Broadman PLLC, of Seattle, an American Indian majority-owned law firm. His practice focuses on representing businesses and tribal governments in public affairs, energy, gaming, taxation, and general economic development. He can be reached at 206.909.3842 or ryan@galandabroadman.com.

Amend IRA Section 17 To Allow Federal Incorporation For Tribal Members

Tribal entrepreneurs frequently have only one avenue to charter a business, be it a sole proprietorship, corporation or limited liability company: state incorporation. That is because many tribal governments still do not have business structures laws or incorporation regimes in place. The problem with state incorporation of a tribal member-owned business, though, is that a state charter is the first thing a state tax collector will cite when attempting to tax the business.  An Indian business' state incorporation should not matter. The U.S. Supreme Court has rejected the notion that state taxation arises from the form in which a tribal party chooses to conduct its business. Mescalero Apache Tribe v. Jones, 411 U.S. 145, 157 n.13 (1972). In Pourier v. South Dakota Dept. of Revenue, 658 N.W.2d 395, 405 (2003), a state supreme court explained:

Congress’ primary objective in Indian law for several decades has been to encourage tribal economic independence and development. By finding that incorporation under state law deprives a business of its Indian identity, we would force economic developers on reservations to forgo the benefits of incorporation in order to maintain their guaranteed protections under federal Indian law. This could hinder economic development.

State taxation or other regulation of tribal member businesses most certainly hinders -- it is in fact anathema to -- Indian economic development. Again, though, an Indian's state business charter becomes the proverbial Exhibit A in a state's case to tax or otherwise regulate the business.  In fact, it may be all a state tax collector needs to assess the Indian business, deferring the (il)legalities until later, meaning when the business will find itself enmeshed in a costly tax litigation battle.

Section 17 of the Indian Reorganization Act, 25 U.S.C. § 461 et seq. (1934), provides that “[t]he Secretary of the Interior may, upon petition by any tribe, issue a charter of incorporation to such tribe . . . .” 25 U.S.C. § 477. Although the title of the IRA states that the statute was intended “to extend to Indians the right to form business and other organizations” (48 Stat. 984), and Section 19 defines an “Indian” as “all persons of Indian descent who are members of any recognized tribe now under Federal jurisdiction" (25 U.S.C. § 479), Interior takes the position that Section 17 itself mandates that charters only be issued to a “tribe” and not any tribal member.

That position, though technically correct perhaps, is myopic. It remains Congress’ primary objective relative to Indian Country to encourage tribal economic independence and development (at least on paper). As such, the Obama Administration, especially given its current campaign to protect the American middle class, should support legislation that would allow tribal member entrepreneurs to incorporate, while maintaining their guaranteed protections under federal Indian law to be free of state interference.

A narrow amendment to Section 17 that would allow Indian persons to federally charter businesses in fulfillment of the law's expressed intent, rather than incorporate under state law and thereby risk destruction via state taxation and other regulation -- yes, certainly easier said than done in this political moment -- should be proposed by the Obama Administration and considered by the Congress.

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  He can be reached at 206.691.3631 or gabe@galandabroadman.com.

Seattle Native American Lawyer Gabe Galanda Named One of the "Best Lawyers in the Business" by Seattle Business Magazine for 2012

Gabe Galanda was named one of the "Best Lawyers in the Business" by Seattle Business magazine. More specifically, he was honored as one of the "leading lawyers in the Puget Sound region for 2012" in both the arenas of Native American Law, and Gaming Law. This is the second time he has been honored by Seattle Business magazine. Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  He can be reached at 206.691.3631 or gabe@galandabroadman.com.

Tribal 'Disobedience' and Internet Gaming

Modern Indian gaming was born when tribal governments refused to follow state laws in the 70s and 80s. There is no reason to think modern Indian Internet gaming will arrive any differently. If Indian Country hopes to remain at the forefront of gaming, it will have to have a role in Internet gaming this year.  And that role will not be given to tribes; it must be taken. Had the Cabazon and Morongo Tribes waited for Congress to give tribes the unobstructed right to game, there’s a real chance that the 422-casino, $26 billion dollar industry would have never materialized. See California v. Cabazon Band of Mission Indians, 480 U.S. 202 (1987). Indian gaming exists because tribal governments opened gaming facilities and dealt with the consequences afterward. Tribes took what was rightfully theirs. Had they simply asked for recognition of their gaming rights from states or Congress, they would never have received them. Like anything worthwhile, it took a fight.

Call it breaking state laws (which we know have never applied to tribal governments), or exercising tribal sovereignty, the result was the same. When tribes took what was theirs, Congress, and the states reacted. IGRA was born, and the rest, though fraught with intergovernmental dispute, is history.  There is no reason to think that tribes can enter the Internet gaming market any differently.  Indeed, according to Professor Robert O. Porter, “Tribal disobedience,” the “process by which Indigenous people engage in ‘disobedient’ actions against the colonizing government in order to protect and defend their inherent and treaty-recognized rights,” is absolutely necessary to ensure the survival of tribal sovereignty.

Certainly, it’s naïve to think that Indian Country will get a seat at the table simply by asking for one. First, states will never treat tribal governments with the requisite respect for such a seat to mean anything.  And the federal government doesn’t do anything it doesn’t have to do.  Second, the Internet gaming table isn’t even set.  We know it’s coming, but we don’t know how.  We think it will be federally regulated, by Commerce or Treasury, but as of now we don’t know whether the NIGC will be consulted before it comes, let alone have any role in regulating it. None of the bills before Congress contemplate the NIGC having any role, even though gaming on Indian lands is subject to IGRA.

On Friday, the Department of Justice made public for the first time its new opinion that interstate Internet lotteries do not violate the Wire Act. And that, probably not coincidentally, was right after Nevada regulators on Thursday paved the way for intra-Nevada online poker. Whatever its form, nationally regulated Internet gaming will change gaming permanently and unrecognizably, and it is thus crucial that tribes get involved now. Regulated online gaming will do for gaming what email did to college. Or business. It’s hard to fathom what Internet gaming will mean. But put simply: it will change everything.

State-sanctioned handheld lotto is just the beginning. Your Monday night football picks, with your season winnings to date, might appear automatically on Facebook, with your online poker or blackjack daily or lifetime winnings appearing in your profile. People will still play in casinos. But there’s a real chance that brick-and-mortar casino numbers will pale in comparison to the daily drop we will see among 20-somethings on their iPhones. New markets flocking to regulated online gaming will be born overnight. And players who frequent tribal casinos may still do so. But new players may never set foot in one, choosing instead to play regulated online slots on their bus rides, roulette while waiting for movies to start, or, as was common at one law school in 2006, online poker during Contracts class.

The regulated online gaming burst may coincide with the bust of tribal exclusivity. Pressure from non-tribal gaming is growing, coupled with hemorrhaging state and local budgets. And there’s simply too much at stake for non-tribal casinos to pack up and go away. Two Oregon businessmen are at it for the fourth time outside of Portland.  And the old saw about leveling the playing field comes up about every two years in Washington State.  Eventually something will stick.

What’s the answer for Indian Country?  In addition to pursuing non-gaming economic development, tribal governments accustomed to steady growth at their brick and mortar casinos have to appreciate what gaming will look like in 2015, 2020, and beyond.  Some tribes have already stuck a toe in the water, launching free poker sites and laying the infrastructure for pay poker. It may not be the first tribe who submits an ordinance that includes Internet poker to the NIGC that blows open Internet gaming. But if tribes begin doing so, the NIGC will have to act, and Congress will respond.  And if tribes can offer gaming online without triggering IGRA or NIGC/DOJ involvement, Congress will react.  It will take an event like Seminole v. Butterworth, or California v. Cabazon, or maybe even some missteps like the Bay Mills off-reservation casino. But when the gaming pundits and lawyers suggest asking for a “seat at the table,” recall that tribal governmental gaming has never been given anything.  If tribes are to have a seat at the Internet gaming table, they must take it.

Anthony Broadman is a partner with Galanda Broadman PLLC in Seattle, and focuses his practice on issues critical to Indian Country. He can be reached at anthony@galandabroadman.com or 206.321.2672.