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.

Pechanga Has Legal Rights to Protect and Preserve Sacred Mountain Peak

Sacred places are the foundation of all other beliefs and practices because they represent the presence of the sacred in our lives. They properly inform us that we are not larger than nature and that we have responsibilities to the rest of the natural world that transcend our own personal desires ... There probably is not sufficient time for the non-Indian population to understand the meaning of sacred lands . . . We can but hope that . . . protection be afforded these sacred places before the world becomes wholly secular and is destroyed. - Vine Deloria Jr., God is Red

According to the Los Angeles Times and related headlines, a construction company challenges the Pechanga Band of Luiseno Indian's testimony that the proposed site for a massive rock quarry would destroy Pechanga cultural properties, specifically a mountain peak where the Tribe's creation story arose.

Federal law recognizes the Tribe's right to protect and preserve that sacred mountain peak, even though it sits on private lands off of the Pechanga Reservation. Tribes can arguably regulate ''off-reservation activities that have significant effects within the reservation,'' which would include the disturbance or destruction of sacred sites on private lands (Wisconsin v. EPA). Tribes also retain usufructuary rights - i.e., rights to enjoy properties that belong to somebody else - in their off-reservation cultural properties (Minnesota v. Mille Lac Band of Chippewa Indians). Among those rights, tribes have reserved access rights to their cultural properties on non-tribal lands, particularly within historic fishing, hunting and gathering grounds (U.S. v. Washington).

Hopefully these tribal rights, recognized at federal common law, will be also be honored by the Riverside County Planning Commission before the world, or at least Riverside County and the Inland Empire, becomes wholly secular and is destroyed.

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 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.

Tribes, Beware of the Federal Bankruptcy Court

The Bankruptcy Court for the District of New Mexico held this week that tribal sovereign immunity does not protect the Jicarilla Apache Nation from the impact of a Chapter 11 plan. In Re Platinum oil Properties, LLC, Case No. 09-10832 (D.NM. Bankr. Aug. 12, 2011). Because the Bankruptcy Code abrogates tribal sovereign immunity, according to the court, tribes have to abide by a reorganization plan. But weirdly, the Jicarilla Tribe does not appear to have made any argument based on its sovereign immunity. Instead, in its motion for summary judgment, the Tribe argued that the debtor’s claims interfered with the tribe’s sovereign ability to control and regulate its jurisdiction. Somebody took the word “sovereign” and ran with it, sticking his or her neck out far more than necessary and reaching the Bankruptcy Code’s definition of governmental unit, on which sovereign immunity abrogation hinges. In other words, the decision is a mess.

What can we learn from this case? Beware when using the term “sovereign.” Ensure, as the Jicarilla Tribe admirably attempted to do, that the court understands even the most elemental facets of tribal sovereignty. Here, that means distinguishing between a tribe’s broad power to regulate and control its jurisdiction, Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, 140 (1982), as opposed to a tribe’s narrow ability to avoid being sued. Kiowa Tribe of Oklahoma v. Mfg. Tech., Inc., 523 U.S. 751, 754 (1998).

Tribes to should explore how and when they can govern their own affairs in the bankruptcy context. Clearly when the matter is left to federal courts, tribes will often lose.

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.

State Successfully Taxes Relocated Indian's Retirement Income -- Really?

On August 12, the Eight Circuit Court of Appeals upheld the state of Minnesota's efforts to tax the retirement income of Charles Diver, a Chippewa Indian who was relocated to Ohio in 1960 under the federal relocation program. He worked there as a dockworker until 1998, when he retired and returned home to the Fond du Lac Reservation in Minnesota. As he drew upon his pension for his retirement, Minnesota began to assess him with income taxes. The Eight Circuit reasons: "Minnesota’s act in taxing a Band member’s pension, earned in Ohio, but received on the reservation, did not violate due process as the member’s Minnesota citizenship created a constitutional nexus for the taxation." That, despite Diver's residence on the Fond du lac Reservation, where he is drawing his retirement income.

Yet as Justice Murphy rightfully explains in dissent:

Diver has never earned income while working off the reservation as a citizen of Minnesota. His pension was earned entirely in the state of Ohio, where he lived and worked for thirty years. Minnesota could not have taxed his wages as he received them because the state did not have the required nexus. Now that Diver has retired and returned to the Fond du Lac reservation, tribal sovereignty precludes Minnesota from imposing a tax on a pension earned during thirty years of work in Ohio. Just as Minnesota could not tax Diver's preretirement Ohio wages simply because he now resides on a reservation located in the state, the same is true for the pension tied to those wages.

Minnesota now faces a $1.3 billion budget deficit in the next biennium and like many other states, seeks to balance the state's budget on the backs of Indians. The Eight Circuit case serves to demonstrate how low states will stoop in the process.

Lest there be any doubt, the state tax man cometh to Indian Country. Be prepared.

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.

Tribal Employers Not Subject to Federal Unemployment Taxation

The Ninth Circuit held Thursday that a tribe or tribal business is excepted from paying Federal Unemployment (FUTA) taxes where services are performed “in the employ of an Indian tribe,” but only where a tribe or its instrumentality is a "common-law" employer of the worker performing the services. The court held that because the Tribe's employee leasing and temporary staffing business was a common-law, as opposed to statutory employer, the IRS had incorrectly failed to refund FUTA taxes paid. A common-law employer is an employer based on the law of agency, while a statutory employee for purposes of FUTA can simply be a paymaster. Although Blue Lake Rancheria had argued that even services provided by statutory employees were excepted from FUTA, it ended up not mattering to the Ninth Circuit, which found that the tribe's business was in fact a common-law employer.

Blue Lake will be required reading as tribal business form entities as the border of common-law employers. Any time a tribal business exercises less than total control over its employees, i.e. via staffing businesses, it should be sure to comply with the guidelines set forth in Blue Lake to ensure that FUTA exposure is minimized.

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.

California BOE Takes Progressive Turn Towards Exempting State Excise Taxes for Landless Tribes

The typically anti-tribal California State Board of Equalization has taken a turn, for the better, by proposing to exempt from state sales and use tax does the "sales of tangible personal property to and purchases of tangible personal property" by California tribal governments that do not have reservation trust lands. The proposed amendments to Regulation 1616 provides:

(G)Property Used in Tribal Self-Governance. Sales and use tax does not apply to sales of tangible personal property to and purchases of tangible personal property by the tribal government of an Indian tribe that is officially recognized by either the United States or the State of California if:

1. The tribal government’s Indian tribe does not have a reservation or the principal place where the tribal government meets to conduct tribal business cannot be its Indian tribe’s reservation because the reservation does not have a building in which the tribal government can meet or the reservation lacks one or more essential utility services, such as water, electricity, gas, sewage, or telephone, or mail service from the United States Postal Service; 2. The property is purchased by the tribal government for use in tribal self-governance, including the governance of tribal members, the conduct of inter-governmental relationships, and the acquisition of trust land; and 3. The property is delivered to the tribal government and ownership of the property transfers to the tribal government at the principal place where the tribal government meets to conduct tribal business.

The purchase of tangible personal property is not exempt from use tax under this paragraph if the property is used for purposes other than tribal self-governance more than it is used for tribal self- governance within the first 12 months following delivery.

The California BOE's proposed rulemaking is a spectacular acknowledgment of tax-exempt tribal status vis-a-vis fee lands owned by tribal governments. As most recently seen in Madison County v. Oneida Indian Nation, for which SCOTUS accepted certiorari before mooting the case this past term, states and their little siblings in county government typically do everything in their power to extract tax monies from Indian-owned fee lands, even though, like all tribal lands, such lands are used to provide essential governmental services and programs to tribal citizens.

The BOE's original April 2011 proposal is here and a more recent proposal of July 2001 is here.

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.

Is Amazon Illegally Collecting State Sales Taxes from Reservation Indians?

Amazon.com has recently been making headlines regarding its opposition to various states' efforts to force the online retailer to collect excise taxes on sales of goods into those states. Those headlines made me wonder: is Amazon charging state sales tax on Indians who buy and receive goods from the online retailer, on the Reservation? State sales taxes of course not be imposed on Indians in Indian Country.

However, upon reviewing Amazon's sales tax policies, there is no mention of sales tax exemption for reservation Indians. That, despite the fact that Amazon is headquartered in a state with 29 federally-recognized tribes.

I'm left to wonder: is Amazon illegally collecting state sales taxes from reservation Indians? If you have reason to know the answer to this question, please let me know.

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.