"Dueling Sovereigns: Collecting Taxes in Indian Country"

Gabe Galanda and Anthony Broadman will be co-presenting, "Dueling Sovereigns: Collecting Taxes in Indian Country," at the 25th Annual Coming Together of Peoples Conference at the University of Wisconsin Law School on March 25, 2011.

State and tribal regulations arguably come into the most direct conflict at tax time. Efforts to streamline the federal tax code could lead the IRS to treat tribes more similarly to states, and some states would like to implement on-reservation sales taxes to ease their budget crises. What case can be made for the interests of each sovereign, and who has been winning when they collide?

Gabriel "Gabe" Galanda and Anthony Broadman are partners at Galanda Broadman PLLC, an American Indian majority-owned law firm. Gabe 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. Anthony can be reached at 206.691.3631 or anthony@galandabroadman.com.

The Business Case for Private Investment and Development in Indian Country

On Wednesday, at RES 2011 in Las Vegas, Gabe Galanda presented a paper titled, "The Business Case for Private Investment and Development in Indian Country" (updated March 31, 2011). The paper was commissioned by the U.S. Interior Department's Office of Indian Energy and Economic Development, for presentation to representatives of Corporate America in attendance at RES.

There has never before been a better time to develop businesses on Indian lands or otherwise in partnership with tribal governments. The Great Recession has taken a disastrous toll on state and local governments. State tax revenues have plummeted, causing state and local governments to cut programs and reduce workforces. Local development impact fees have spiked. Tax assessors are assessing property and excise taxes with reckless abandon, as many state legislatures having withdrawn various tax exemptions and incentives that were designed to catalyze local business development and job creation. Obtaining building permits now takes even longer. It is getting more and more difficult, if not impossible in some jurisdictions, to develop new businesses in traditional commercial sectors.

But while state and local governments struggle to make ends meet, tribal governments have largely avoided economic catastrophe. Fueled by the $26.4 billion Indian gaming industry, Indian Country is generally faring much better than neighboring local economies since the recession took hold in 2008. Ironically, not having property tax bases to begin with, most tribal governmental revenues have remained stable. But tribes are not getting complacent; they recognize that the Indian gaming industry will not sustain its exponential growth over the last decade. The inevitable legalization of Internet gaming and, in some jurisdictions, commercial land-based gaming, will eventually put a major dent in Indian Country’s bottom line. As such, tribal governments are more than ever looking to diversify their economies.

Where tribes bring a staggering array tangibles like land and location, and intangibles like sovereignty, relaxed red tape and tax exemption, their corporate business partners bring proven industry expertise and new capital to the reservation. Whether through a joint venture between a tribe and a non-Indian business, a tribal land lease to a non-tribal company, or a tax credit investment – all of which are contemplated below – there are an abundance of very advantageous reservation development deals for Corporate America to symbiotically explore with tribes at this time in our nation’s history.

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.

See, the State Tax Man Cometh

Last month, Indian Country Today Media Network has published a column by Gabe Galanda, "The State Taxman Cometh." Consider now this headline, "Tax man eyes Indian tobacco sales."

The state's top tax collector said the state is ready to quickly end tax-free cigarette sales by Indian retailers to non-Indian customers.

New York State is awaiting a ruling from a federal appeals court on the long-simmering tobacco tax issue, said Thomas Mattox, who was confirmed Tuesday by the State Senate to the tax commissioner's post.

"We're prepared to enforce immediately," Mattox said after being unanimously backed by the Senate Finance Committee for the tax post. . . .

Gov. Andrew M. Cuomo is counting on $130 million in revenue by ending the tax-free Indian tobacco sales. The state wants to collect the tax "upstream" at the tobacco wholesale level so that the taxes already would have been paid to Albany by the time cigarettes reach Indian retailers.

Expect to see many more news stories about state and local tax collectors seeking to balance state budgets on the backs of Indians.

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.

Arbitration in Indian Country: Taking the Long View

Gabe Galanda has published “Arbitration in Indian Country: Taking the Long View”, in the current edition of the American Arbitration Association's Dispute Resolution Journal.

By agreeing to private arbitration, however, tribes do not cede litigation or settlement leverage to non-tribal opponents who know tribes are increasingly fearful of litigating and losing again in state or federal court and thereby creating bad law for all tribes.

He will be speaking from that paper at Seattle University Law School on March 18 at a symposium, “ADR’s Role in Resolving Indian Disputes: A Tangled Net or A Connected Web?”

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 Mediation and Arbitration: Tangled Net or Connected Web?

Gabe Galanda will be speaking at Seattle University Law School on March 18 at a symposium, “ADR’s Role in Resolving Indian Disputes: A Tangled Net or A Connected Web?” The day-long symposium will bring together arbitrators and mediators, tribal attorneys, scholars and judges, and attorneys representing non-Indian commercial clients to discuss the role and proper use of mediation and arbitration to settle Indian Country-based disputes, particularly those involving non-Indian parties.

Gabe will speak at 9:30 AM, regarding “The role of 3rd party alternative dispute resolution (ADR) in resolving disputes between Indian and non-Indian parties.” His comments will be based on his article in the current edition of Dispute Resolution Journal, published by the American Arbitration Association (AAA), titled, “Arbitration in Indian Country: Taking the Long View.”

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.

Economic Issues Affecting Indian Gaming

Gaming Law Review & Economics has published a note, "Economic Issues Affecting Native American Gaming," featuring Gabe Galanda's remarks during a roundtable discussion last fall regarding economic issuing impacting the $26.5 billion Indian gaming industry. On the state of Indian gaming markets vis-a-vis that of domestic commercial gaming meccas:

[T]he New York Times wrote about this phenomenon, indicating that Reno and Lake Tahoe are seeing their revenues erode by as much as 25%–40%. That is juxtaposed with places like the Pacific Northwest, which are seeing modest, perhaps even healthy, growth during the same time period.

On the state of tribal financing:

[Y]ou are seeing that gaming tribes can only take out bank debt based on 2 to 2.5 times historical EBITDA, meaning proven cash flow. You once were able to leverage, very favorably, relatively unproven cash flows. Now though, unless you have historical, proven cash flow, you are going to have a very difficult time obtaining any money, and what money you are going to be able to obtain is probably far less—and it will cost you far more— than in prior years.

On the state of Indian gaming contracting:

There are a number of contracts, both in form and substance, that pertain to Class II or Class III gaming—most notably, those for gaming machines. We are now seeing the same type of financial scrutiny of deal terms in these contracts that we are talking about in regard to significant financing or restructuring transactions. We are seeing that scrutiny of what historically have been almost boilerplate agreements between tribal casino operators and their business partners . . .

On the states' budget crises:

[T]here is an estimated $112 billion shortfall amongst the states collectively. I will tell you that on the ground, in the offices of state or local assessors, there are government officials who are looking perhaps beyond the casino itself, the monies flowing from that particular casino and the properties within that casino, but still towards the tribe, to figure out how they can get their hooks into gaming proceeds running to the tribal government.

On state Class III gaming "fees" in lieu of taxes:

[W]e will see state governments in particular trying to develop new ways of imposing fees on gaming activities in circumvention of the stated intent, purpose, and spirit of IGRA, in desperate attempt to balance hemorrhaging state budgets.

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.

Furthering the Case for Tribal Legalization of Marijuana

Two February 20, 2011 national news stories further suggest that it is time for Indian Country to begin seriously engaging in the state-federal debate about legalizing, regulating and taxing marijuana. From the Oklahoman, "How $31 of pot gave mom a 10-year-prison sentence":

Because of $31 in marijuana sales, Patricia Marilyn Spottedcrow is now serving 10 years in prison, has been taken away from her four young children and husband, and has ended her work in nursing homes.

Tragically, Patricia Marilyn Spottedcrow is not the only poor Native American who has had to resort to selling illegal contraband to support her family, and whose family was shattered by the failed effects of the war on drugs. Accordingly, some tribal governments have already taken the matter of marijuana legalization and regulation into their own hands. Other tribes have considered doing so but decided marijuana was and is not part of tribal ways.

From the notoriously conservative Seattle Times editorial board, "The Washington Legislature should legalize marijuana":

MARIJUANA should be legalized, regulated and taxed. The push to repeal federal prohibition should come from the states, and it should begin with the state of Washington. . . .

[I]n America, prohibition is the pursuit of the impossible. It does impose huge costs. There has been:

• A cost to the people arrested and stigmatized as criminals, particularly to students who lose university scholarships because of a single conviction;

• A cost in wasted police time, wasted court time and wasted public resources in the building of jails and prisons;

• A cost in disrespect for the law and, in some U.S. cities, the corruption of police departments;

• A cost in lost civil liberties and lost privacy by such measures as the tapping of private telephones and invasion of private homes;

• A cost in the encouragement of criminal lifestyle among youth, and the consequent rise in theft, assault, intimidation, injury and murder, including multinational criminal gangs; and

• A cost in tax revenues lost by federal, state and local governments — revenues that for this state might be on the order of $300 million a year.

Some drugs have such horrible effects on the human body that the costs of prohibition may be worth it. Not marijuana. This state's experience with medical marijuana and Seattle's tolerance policy suggest that with cannabis, legalization will work — and surprisingly well.

Not only will it work, but it is coming. You can feel it.

To the extent consistent with tribal ways, tribal governments should draft behind the states in the push to repeal federal prohibition, and stand ready to legalize, regulate and tax (or tax exempt) marijuana under tribal law when that day comes.

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. This information is not intended to create an attorney/client relationship and shall not be construed as legal advice.

Native American Religious Freedom Issues in the Washington State Prison System

Please Join The Center for Indian Law and Policy, Fred T. Korematsu Center, Access to Justice Institute, Admissions and the Native American Law Student’s Association for the following program:

Protecting the Right of Native and Indian Inmates Incarcerated in the State of Washington Prison System to Engage in Traditional Ceremonies and Religious Practices

Tribal Leaders, Practitioners from the ACLU, Galanda Broadman and the Assistant Secretary of the Department of Corrections will discuss the efforts that are underway to ensure that Native and Indian inmates have the opportunity to practice their religion and to have access to traditional religious leaders.

March 28, 2011 3:00 PM – 5:00 PM School of Law 2nd Floor Gallery

All are welcome to attend. A reception with traditional food will follow.

RSVP to Guadalupe Ceballos at (206) 398-4284 or CILP@seattleu.edu

Download the the flyer 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.

Gabe Galanda: "The State Tax Man Cometh"

The Indian Country Today Media Network has published a column by Gabe Galanda, "The State Taxman Cometh."

[T]ribal governments and their business partners must redouble their efforts to prevent taxation by the state and its little sibling. Indian leaders should reevaluate the terms of their revenue allocation plans and business partnerships, and related tax laws, to ensure tribal intramural and external dealings are insulated from non-tribal taxation. Tribal laws should be amended and business deals restructured as necessary. Policies of tribal taxation, or not, should also be reexamined, insofar as tribal excise taxation of various reservation-based economic activities will create factors that militate against state or local taxation.

In 2011, the state taxman cometh. 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.

AMERIND Should Clearly Waive Its Immunity in Insurance Contracts

Today's Eighth Circuit Court of Appeals decision in AMERIND v. Malaterre is significant. AMERIND is a federally-chartered Section 17 corporation, owned by a consortium of tribes, which operates a self-insurance risk pool and is the biggest insurer of tribal homes in Indian Country. According to AMERIND's web-site, its "IHBG Protection Program currently serves over 275 housing authorities and tribal designated housing entities in the United States."

While the court's holding that AMERIND "serves as an arm of the [Charter Tribes] and not as a mere business and is thus entitled to sovereign immunity" is a resounding affirmation of tribal immunity, especially for Section 17 entities and multi-tribal consortia, the ruling could potentially render the various AMERIND property insurance policies unenforceable. As such, on a go forward basis AMERIND should include in all of its policies, language that would operate to clearly and unequivocally waive its immunity, in limited fashion, with regard to claims by tribal insureds for insurance coverage.

There are many ways to craft limited immunity waiver language that will insulate the company from undue litigation attack, e.g., the direct action lawsuit underlying Malaterre, yet assure tribal insureds that their covered losses will be paid. I hope AMERIND will allow, or continue to allow, due recourse against its tribal policies notwithstanding its momentous court victory today.

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.