AUTO v. Washington: An Imminent Threat to Washington Tribes’ Sovereignty

Make no mistake, the lawsuit brought by the Washington Automotive United Trades Organization (AUTO) seeks to eviscerate Washington tribes’ intergovernmental sovereign immunity and expose Tribal governments to suit by third parties based on agreements Tribes have entered into with the state. This month, the Supreme Court of the State of Washington agreed to hear the appeal of AUTO v. Washington, or as AUTO calls it, “AUTO v. Governor Gregoire.” A more accurate title might be AUTO v. Washington Indian Country. AUTO is targeting state-Tribal compacts, presumably because Tribal fuel enterprises are competitors. AUTO argues that the state and Governor are violating the Washington Constitution by entering into the fuel compacts with Tribes and that the legislative system surrounding the compacts itself is illegal. Never mind that Washington’s approach to the tribal fuel tax conundrum is the state’s attempt to comply with binding federal law related to taxation in Indian Country.

The state Supreme Court accepted review of the Gray’s Harbor Superior Court order dismissing AUTO’s case based on the indispensability of several Washington Indian Tribes, who are necessary parties to the case. The procedural concept of indispensability requires a case to be dismissed if there is a party who should be a part of the case but cannot be joined due to, for instance, sovereign immunity. It can be a muddy procedural doctrine, but it’s one that often protects Tribal interests, since those interests should not be adjudicated unless Tribal sovereigns agree on the forum.

What can we expect? There are several reasons for Washington Indian Country (and Indian Country at large) to be concerned. First, the state Supreme Court decided to review the case. That decision itself can probably be accurately viewed as negative for Tribes since the trial court’s decision appears to have been correct under the Washington Civil Rules and cases interpreting them.

Second, the core of the anti-Tribal dissent in Wright v. CTEC, the last significant Washington Supreme Court on tribal sovereign immunity, remains on the Court. The Justices who will likely participate in AUTO and voted in Wright, are split 3-3 (Justices Chambers, C. Johnson, and J. Johnson against tribal interests v. Justices Madsen, Owens and Fairhurst for them). The addition of Justices Stephens, and Wiggins, possibly with Justice Alexander’s replacement, make this one tough to handicap.

Add the Court’s recent frenetic approach in State v. Eriksen to the mix (affirmation of conviction; reconsideration; withdrawal of opinion; affirmation of conviction; reconsideration; withdrawal of opinion; reversal) and things become even more muddled. Although Eriksen was not a sovereign immunity case, the Court was forced -- or chose -- to examine tribal sovereignty relative to the state in the criminal context. The Court was again well split, this time with Justices Owens, C. Johnson, and Chambers finding, correctly, that the Lummi Nation’s inherent authority justified the detention of a dangerously intoxicated non-Indian driver.

More recent arrivals Justices Stephens and Wiggins made a majority with Justices Fairhurst, Madsen, and J. Johnson, holding that the Lummi Nation could not stop and detain a drunk driver off the Reservation until non-Tribal cops could arrive. Again, Eriksen shares little with AUTO, but taking a simplistic pro- or anti-tribal snapshot of the court suggests that if Justice Alexander, set for mandatory retirement this year, does not participate in AUTO, the court could split as follows, depending on whether Wright or Eriksen describes the voting lines:

AUTO is far more analogous to Wright, as procedural issues of sovereign immunity are at play. And it’s certainly not fair or accurate at this point to cast any justice as anti- or pro-Tribal based on these two cases. Indeed, outside the Tribal bar Wright and AUTO might be viewed as cases more about civil procedure (Rule 19 for AUTO and the CR 12(b) standard for Wright) than Tribal sovereignty. At least the results of AUTO will provide court-watchers with more data for guessing at results.

Still, it’s clear what AUTO is targeting legally. As set forth clearly in its brief, AUTO argues that (1) it can join Tribes in the suit by suing tribal officials in their official capacity and (2) Tribes waived their sovereign immunity, apparently as to AUTO, by entering into the fuel compacts. While these claims seem patently wrong, they are the very type of procedural formalisms anti-Tribal jurists can hide behind in fashioning novel expansions of the law related to Tribal sovereign immunity. Stay tuned.

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. He can be reached at 206.691.3631 or anthony@galandabroadman.com, or or via galandabroadman.com.

Taking Government-to-Government Relationships to the Bank

After years of fighting the development of a Cowlitz governmental gaming facility tooth and nail – appealing BIA decisions, questioning the honesty of tribal officials, and even arguing that tribal members do not need jobs as much as non-Indians – local governments in Southwest Washington have finally agreed to negotiate with the Cowlitz Indian Tribe in a government-to-government fashion regarding their proposed plans for a casino. Because now the local governments want something. As reported by the Columbian:

[T]he Cowlitz Indian Tribe . . . is in talks to help La Center pay a portion of the tab for the sewer lines to the junction, in exchange for aid moving waste from its 152 acres of land west of I-5, city and tribe officials said. The Cowlitz tribe aims to build a casino on its land.

Six months after the La Center City Council voted to open talks with the tribe, leaders of both bodies said Tuesday that preliminary negotiations are going well and they hope they can forge a mutually beneficial relationship. That includes current talks about sewers, which have been ongoing the past month, and soon-to-come discussions on a new interchange off I-5 that would allow motorists easier access to the tribe’s land.

Such talks are significant considering the council and tribe did not officially speak about the proposed casino for four years after the council banned all dialogue with the tribe in 2007.

“I am quite surprised,” La Center Mayor Jim Irish said of negotiations, “considering we didn’t want to work with them in the past.”

This is nothing new. Slowly, local governments are coming to realize that working with tribal governments to find amicable solutions to mutual problems is much more beneficial than the zero-sum games of yesteryear.

In fact, even cash contributions are not off the table. Earlier this year, in New york, the Seneca Nation contributed over $1 million to a fund to help local government infrastructure; in California, the Yolo Indian Gaming Community Benefit Committee awarded over $200,000 in grants to local agencies affected by tribal gaming; in Michigan, the Saginaw Chippewa Indian Tribe distributed over $2.3 million to nearby schools and local governments; and here in Washington State, as reported by NPR,

Native American tribes . . . are bailing out financially troubled local governments. Most native tribes are still among the poorest communities in the U.S. But in Washington, casino revenue has allowed tribes to make big donations to school districts and even to fund local government positions.

Unlike state and local governments who have no qualms invading the sovereignty of other nations when their coffers run dry, tribal governments are on their own, looking inward for solutions – and finding them. Diversifying business; actively asserting tribal sovereignty; reinvesting in local economies; protecting areas of cultural significance; investing in clean energy; generally reevaluating the playing field – this is what’s going on in Indian country today. As state and local governments flail around aimlessly, wreaking havoc in Indian country and beyond, tribes are showing integrity. And as good neighbors, tribes are willing to lend a helping hand. Indeed, according to Melvin Sheldon, Chairman of the Tulalip Tribes, many tribes in Washington State are now “able to help out other communities. [F]or the tribes that can give . . . it’s a way to say hey, we've made it, and this is who we are.”

Local governments take notice: working with tribal governments is an idea that you can take to the bank.

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.

Ryan Dreveskracht Joins Galanda Broadman

Ryan Dreveskracht has been hired as an Associate by Galanda Broadman, PLLC, a Seattle-based law firm dedicated to representing American Indian interests. In August, Ryan completed a clerkship with Judge Kathleen Kay of the U.S. District Court for the Western District of Louisiana. Ryan received his L.L.M. in Sustainable International Development from the University of Washington School of Law, and his J.D. from the University of Arizona College of Law, where he also obtained a certificate in Indigenous Peoples Law and Policy. He holds a B.A. in Philosophy and Law, Society, and Justice from the University of Washington, and an A.A. from Lower Columbia College.

Ryan is a prolific legal scholar, having published several works regarding energy development, taxation, jurisdiction, and tribal-federal relations. He is the Managing Editor of the National Lawyer’s Guild Review. Ryan’s recent cutting-edge legal and economic scholarship includes:

• Washington State: Collect Your Own Taxes – That’s Where the Money’s At, The Circle: News From a Native American Perspective, August 15, 2011 • The Shifting Tide of Economic Policy: Will Indian Country Be Left to Drown?, Indian Country Today, April 7, 2011 • Native Nation Economic Development via the Implementation of Solar Projects: How to Make it Work, 68 Washington & Lee Law Review 27 (2011) • Tribal Court Jurisdiction Stripping and Native Nation Economies: A Trip Down the Rabbit Hole, 68 National Lawyers Guild Review 65 (2011) • The Impact of Digital Technology on Indigenous Peoples, in Robert A. Hershey, EcoLiterateLaw: Globalization and the Transformation of Cultures and Humanity 114 (2010)

Galanda Broadman is a majority Indian-owned law firm that represents tribal governments, businesses and members in critical litigation, business and regulatory matters.

Indian Gaming Is Not Forever

This syndicated opinion, "America's gambling addiction threatens the nation's soul," which appears in newspapers across the country today, brings into stark focus why Indian gaming is not forever. While Indian gaming, i.e. the tribal brick-and-mortar casino as we currently know it, has not outlasted its useful life, there will come a time when Indian gaming, or at least its $26 billion in annual gross revenues, will fall off, if not fade away.

That is because growing forces like Internet gaming (an if not a when), state-run gambling activities (for sake of balanced state budgets), and private casino development (or "government-countenanced" gaming via taxation) will eventually erode the tribal gaming market share. Indeed:

Currently, the Washington, D.C., government hopes to install an Internet gambling hub by the end of this year. California and Massachusetts have bills pending. Other states are watching with interest to see if the federal Justice Department chooses to enforce existing law that seems, at face value, to prohibit online wagering.

Today's economies and politics are fueling the push to universalized gambling. State governments struggling with monster deficits are desperate for any new form of revenue. And the nation seems seized by weirdly irrational politics that equates any tax increase with original sin.

Already, government-countenanced (or directly run) gambling is at a historical high-water mark. All but seven states have lotteries. Casino gambling, both state-countenanced and run by Indian tribes, is spreading like wildfire, especially in the Northeast. Each year, at least half of America's states consider new gambling outlets. "There is a legalized gambling avalanche in progress in America," Skolnik concludes.

In addition, the "social costs of gambling" highlighted in this column, including so-called problem gambling, will eventually cause policy changes in the national gaming space that will negatively impact the Indian gaming market.

Now is the time for tribal governments to diversify their economies; to diversify away from any tribe's sole reliance on its casino to fund essential governmental services and programs. Don't wait.

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-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, or via galandabroadman.com.

The Time Is Now For Tribal Clean Energy

Indian country should be taking the Fed’s renewable energy policies to the bank. In January of 2011, U.S. Energy Secretary Steven Chu announced unyielding support for tribes in their efforts to use alternative energies to “improv[e] the environment and support[] longterm clean energy jobs.” Part of Secretary Chu’s plan included making millions of dollars available for renewable energy projects on tribal lands. Other federal economic has incentives abound, including: renewable energy tax credits, federal grants, clean energy renewable bonds, production tax credits, residential energy efficiency tax credits, green schools programs, and energy efficient appliance rebate programs – just to name a few.

These incentives are not limited to the Fed either. States are passing renewable energy portfolio standards – laws that require utility companies to purchase a mandated amount of their energy from renewable sources – with fervor. States do not have the capacity to meet these targets on their own.

The general economic climate also remains favorable. In FY2010, clean energy investments grew by 30 percent, to $243 billion. An estimated $1 trillion in revenue is possible were Indian country to fully develop its energy resources.

Yet, as of February 2011, only one commercial scale renewable energy project is operating in Indian country. What gives?

As often is the case in Indian country, unfavorable and burdensome federal regulations that do not take account of the Indian perspective are the culprit. Put simply, the only policies that work are those developed by Indians, for Indians, with the least amount of federal intervention as possible. Earlier this week, the New York Times offered a similar conclusion:

The Rosebud Sioux are proud of the Owl Feather War Bonnet Wind Farm, a 30-megawatt project that sits on the rolling hills that the tribe has called home for centuries.

The South Dakota farm represents the tribe's opportunity to escape a high unemployment rate by tapping into the country's renewable energy needs. But a slew of obstacles has stalled the shovel-ready project, beginning with the 18 months it took the Bureau of Indian Affairs to approve the leasing agreement back in 2008. . . .

Today, the Obama administration is hoping to eliminate such bureaucratic impediments through better consultations with tribes on domestic policies. . . .

The results of such discussions – particularly when it comes to energy policy – are unclear. The Owl Feather War Bonnet farm still sits unused, despite the presence of an Air Force base nearby that the tribe had hoped would buy its energy.

The federal goals of a “clean energy economy” cannot be met without cooperation from Indian country. However, without meaningful consultation, minimized federal red-tape, and a genuine government-to-government relationship, the Feds’ renewable energy policies will never come to fruition. Having identified what hinders alternative energy development, it is now time for Congress to write necessary legislation to allow tribes to pursue true energy self-determination.

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.

Gabe Galanda to Keynote the 2011 Northern Minnesota Tribal Economic Development Summit & Trade Show

On September 14, Gabe Galanda will deliver the keynote address at the 2011 Northern Minnesota Tribal Economic Development Summit & Trade Show at the Shooting Star Casino Hotel & Event Center on then White Earth Reservation. Gabe will preach the need for tribes to diversify their economies away from sole or primary dependence on gaming revenues, and offer ideas about how to accomplish that goal. He will also be participating in an afternoon break-out session with local tribal leaders. Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-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, or via galandabroadman.com.

10th Circuit Sounds Death Knell for Bracker Balancing

In a recent 2-1 opinion, the Tenth Circuit Court of Appeals over-ruled a trial court ruling in Ute Mountain Ute Tribe v. Rodriguez that preempted several New Mexico state taxes on oil and gas extracted from tribal lands. Despite robust federal and tribal regulation of those natural resources, including the tribe's exclusion of state agents from any on-reservation regulatory behavior, the appeals court 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. In so ruling, the Tenth Circuit disregarded SCOTUS' instruction in Bracker and Ramah to disregard alleged off-reservation state impacts, as Judge Lucero rightfully observes in dissent.

While in a footnote the court took care to not "purport to hold that off-reservation infrastructure or services may be considered in every instance where they provide a benefit of any magnitude to the on-reservation activity" (emphasis in original), after Ute Mountain it is hard to fathom how tribes in the Tenth Circuit will not encounter state tax collectors with their fingers firmly holding down the state side of the Bracker scale.

Thankfully for tribes in the Ninth Circuit Hoopa Valley Tribe v. Nevins still disallows federal trial and appeals courts from considering alleged off-reservation state burdens.

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-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, or via galandabroadman.com.

Republicans Threaten to Cut Federal Indian Country Tax Benefits

Amidst the debt reduction frenzy in Washington, DC, Republican leaders are now threatening to do away with the Tribal Economic Development Bond and New Market Tax Credit programs, both of which confer vital federal tax benefits which tribes are increasingly using to attract private dollars to the reservation in order to diversify Indian economies. Indian Country must brace itself for its tax status becoming a menu item in the intensely partisan federal spending imbroglio. Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-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, or via galandabroadman.com.

The Indian Tax Double Standard

Ryan Dreveskracht points out the double standard of sales tax in Washington State: the Department of Revenue turns a blind eye to the sales taxes it loses when Washington citizens drive to Oregon to make large consumer purchases. Meanwhile, the state vigorously enforces its tobacco sin taxes on Washington citizens who drive to Indian reservations to purchase cigarettes. Similarly, Idaho Governor Butch Otter infamously wrote a love letter to Washington and Oregon businesses, seeking to woo them to Idaho by promising lower corporate income taxes. Washington responded in kind: ("States trying to attract each others' businesses"). Still, nobody accused any Northwest state government of "marketing a tax advantage" or "creating an unlevel playing field." Meanwhile, tribal governments that leverage their favorable sovereign tax status are perennially accused of doing such things by their neighbor governments.

In addition, state and local governments can issue tax-exempt bonds for economic development projects like hotels, convention centers, golf courses and recreation facilities to promote their economic development. Meanwhile, the IRS has determined that like-kind hotels, convention centers, golf courses and recreation facilities on Indian reservations do not serve "essential governmental functions." As such, tribal governments cannot avail themselves of cheaper capital.

On June 15, the Internal Revenue Service Advisory Committee on Tax Exempt and Government Entities issues a report, which in part concluded that: "the [tribal] essential governmental function standard should be eliminated. Achieving at least parity with state and local governments in terms of access to low cost capital for more wide-ranging economic development projects has been an unmet goal of the tribes for decades." Agreed.

The Indian tax double standard. Will it ever end? Will there ever be parity? I'm not optimistic.

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-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, or via galandabroadman.com.

Gabe Galanda to Co-Chair 7th Annual Re-Emerging Northwest Tribal Economies

Gabe Galanda will be co-chairing the 7th Annual Re-Emerging Northwest Tribal Economies conference at Tulalip Casino Resort on August 4-5, 2011.

Indian gaming recently experienced its first decline in annual revenues due to the recession. The inevitable legalization of Internet gaming will further challenge Indian gaming's viability. Federal contract preferences for tribal small businesses are under siege by Congress. Meanwhile, state governments refuse to treat tribes like governments, as they seek to extract value from the reservation by taxing tribes in order to balance woeful state budgets.

Still, with various federally-backed economic and tax incentives, there has never been a better time for investment and development in Indian Country. With tribes needing to diversify Indian economies to minimize tribal reliance on Indian gaming, Indian Country is looks to bring new industries to the reservation and also to joint venture with businesses off the reservation and abroad. In addition, the tribal private sector grows by the day, as Indian small and family-owned businesses take flight and permeate the tribal public sector and Corporate America.

Gabe will also be presenting on "Tribal Joint Venture Partnerships: The Latest Legal and Business Developments Shaping How Tribal-Private Partnerships Might be Structured to Maximize Sovereign Benefits for Both Parties."

Anthony Broadman will speak on "Indian Tax Update: What is New in the Arena of Indian Country Taxation?"

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-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, or via galandabroadman.com.