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.

Indian Gaming and the New York Times' Crystal Ball

Today the New York Times tells a fascinating story about the plight of the world's largest casino, Foxwoods Resort Casino. For gaming tribes, the story should serve as yet another loud and clear wake up call that Indian gaming, as we currently know it, will not last forever. Consider these passages from the ominously titled story, "Foxwoods Casino is Fighting for Its Life":

[H]ow the casino reached this point, and the challenges its owners and operators now confront, is part of a much larger story — one involving the gradual relaxation of moral prohibitions against gambling, a desperate search for new revenue by state governments and the proliferation of new casinos across America. Casino gambling has become a commodity, available within a day’s drive to the vast majority of U.S. residents. Some in the industry talk of there being an oversupply, as if their product were lumber or soybeans.

Yes, the casino gambling market is saturated, and it will only continue to saturate.

In October, a casino opened at the Aqueduct racetrack in Queens with 4,500 slot machines, and Gov. Andrew Cuomo is pushing an expansion plan for the site that includes a hotel and what would be the nation’s largest convention center. And lawmakers in Massachusetts recently voted to issue licenses for a slots parlor and three full resort casinos — an especially ominous development for the Connecticut casinos, which draw about 30 percent of their clientele from Massachusetts, because many gamblers are ruled by what is known in the business as the law of gravity. They stop where the pull is the strongest, which is usually the nearest casino.

Yes, new non-tribal, brick-and-mortar casinos and racinos are coming to a state near you; perhaps even a neighboring state that does not run afoul of tribal Class III gaming exclusivity.

Resistance to gambling, however, has been overwhelmed by the need for new sources of public revenue in an era when it has become nearly impossible, at any level of government, to raise taxes or even to let temporary tax cuts expire. A kind of self-perpetuating momentum fuels gambling’s growth: the more states that legalize it, the more politicians in states that haven’t done so argue that if their citizens are going to throw money into slot machines, they might as well do it at home.

Yes, while states cannot effectively raises taxes in today's political climate, they can and will create new taxing objects, namely commercial gaming.

Foxwoods had been an early mover, built to stand astride a huge geographic area — much like the Pequot tribe once dominated a big swath of New England. But as the casino business in America has expanded, Foxwoods’s piece of it has become smaller and will continue to shrink.

Indeed, other successful gaming tribes and early movers, also built to stand astride huge, exclusive geographic areas, very well may, as the casino business in American continues to expand, also begin to shrink. If or when that day comes, those tribes must be prepared to fill the void of gaming revenues with other profit streams.

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.

Indian Country Must Stop the STOP Act!

Indian tribes are not engaged in illegal smuggling of tobacco.  Indian tribes oppose the STOP Act because it interferes with completely legal tobacco sales on Indian reservations, and with tribal government collection of tobacco taxes that fund critical governmental services. Tribal entrepreneurs, regulated and taxed by tribal governments, are able to sell their products at below-market prices because they are not part of the Big Tobacco market.  Big Tobacco has sought to monopolize and price-fix through state taxation and regulation, particularly through those provisions of state law that implement the Master Settlement Agreement.  The STOP Act would tip the scales towards Big Tobacco, via the states, through state tax collection and the standardization of tobacco prices before tobacco products ever reach Indian Reservations.  These revenue-controlling provisions of the STOP Act have nothing to do with public health or child welfare.

Further, the STOP Act will very likely violate U.S. Constitutionally protected Indian Treaties and upset tribal-state tax compacts; undermine the legal tribal manufacture of tobacco; and impermissibly sanction tribal commerce – exchange that is protected by the federal Constitution’s mandate that Congress regulate commerce “among the several states, and with the Indian tribes.”   It is time for Congress to stand up to its responsibilities and fully include Indian tribal regulatory and taxing authority in the laws that regulate commerce in tobacco.

Section 103(a) would require that every manufacturer or importer (including tribal governments) stamp each tobacco package with a “unique identification marker.”  Although 103(b) requires that the “unique identification marker” “not interfere” with state, local or Indian tax stamps, the marker would be designed to “facilitate collection of” all currently applicable state and federal taxes and to “facilitate the enforcement” of other federal laws against tribal manufacturers, wholesalers or distributors, such as the PACT Act.  The marker must provide the “value” of the marker, a tracking code, the name and address of the stamper, the date that it was stamped, and the name and address of the “first unrelated person purchasing or otherwise receiving” the product.  Although the “marker” is couched as a tracking device, rather than a tax stamp, the statute arguably leaves room for all forms taxation at the manufacturer level.  The fact that the stamp has a “value” is especially telling.

Section 105(a) would require that every tribal manufacturer, wholesaler or importer of tobacco obtain a permit from the Secretary of Treasury (presumably).  In order to obtain the permit, the applicant must be in compliance with the PACT Act, the Jenkins Act, and numerous other tobacco-specific laws and regulations.  The applicant must also be in compliance with “all other Federal, State, and Indian tribal laws relating to the taxation, manufacture, importation, exportation, distribution, marketing, sale, or transportation of tobacco products . . . .”  In other words, it forces tribal manufacturers, wholesalers, and importers to comply with state laws (even if not expressly subject to state taxation per Section 301).  Importantly, it also forces tribal manufacturers to comply with state laws that implement the Master Settlement Agreement, something that tribes had nothing to do with.

Section 108(b) would make it illegal to ship, transport, deliver, or receive any tobacco products that are unstamped.  It also makes it illegal to sell more than 3,000 cigarettes in a single transaction or a series of related transactions.  Considering how the Department of Justice has to date construed the PACT Act and its definitions of “inter-state commerce” and “delivery seller,” Section 108(b) likely interferes with certain Indian Treaty rights to travel for purpose of commerce, including tobacco commerce, unfettered from state and federal limitations.  See, e.g., The Treaty With the Yakama, 12 Stat. 951, Art. III (1859).

Section 301 says that “[n]othing in this Act or the amendments made by this Act shall be construed to amend, modify, or otherwise affect . . . any agreements, compacts, or other intergovernmental agreements . . . relating to the collection of taxes on tobacco products sold in Indian country.”  Of course, these agreements and compacts arose in a different climate, one where federal law did not sanction the collection of state taxes and otherwise subjecting tribal governments to local restrictions.  Under the STOP Act, states no longer have an incentive to stay in compliance with these agreements because the execution of otherwise non-enforceable state regulations can now be facilitated in Indian Country by the United States and its Treasury and Justice Departments.

Section 301 does contain the following disclaimer:

Nothing in this Act or the amendments made by this Act shall be construed to amend, modify, or otherwise affect . . . any limitations under Federal or State law, including Federal common law and treaties, on State, local, and tribal tax and regulatory authority with respect to the sale, use, or distribution of tobacco products or processed tobacco by or to Indian tribes, tribal members, tribal enterprises, or in Indian country; . . . any Federal law, including Federal common law and treaties, regarding State jurisdiction, or lack thereof, over any Indian tribe, tribal member, tribal enterprise, Indian reservations, or other land held by the United States in trust for one or more Indian tribes; or . . . any State or local government authority to bring enforcement actions against persons located in Indian country.

This savings clause is similar to that of Section 5 the PACT Act.  However, as we have seen with the PACT Act, such provisions are not enough to deter states and Big Tobacco from seeking to destroy inter-tribal tobacco commerce via state regulation and taxation and federal enforcement.  In order to be effective, the savings clause should specifically integrate tribal governments as appropriate regulatory and tax collection entities on the same basis as state governments, as well disclaim any application of state regulations to tribal tobacco businesses acting in Indian Country, especially in inter-tribal 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.

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.     

If You Haven't Drank The Tribal Economic Diversification Kool-Aid, You Better Quickly Take A Sip

Indian gaming is the first tribal economy that has ever brought the type of non-Indian capital to Indian Country to make a meaningful difference in the lives of Reservation Indians. Today, however, Indian gaming is under it's most severe threat since states attempted to outlaw Indian gaming in the 1980s, prior to the Supreme Court's Cabazon decision. According to the New York Times today::

After shunning the concept for years, Massachusetts, seeking solutions to its budget woes, last fall became the first New England state to pass a broad law allowing resort casinos. Now others may not be far behind. . . . In New Hampshire, which dreads losing tourism money to Massachusetts, lawmakers are considering a bill that would allow up to four casinos there. Maine just granted its first casino license to a six-year-old Bangor slot parlor that will add table games next month, and a second casino is expected to open in Oxford this year. Both are the result of voter referendums. Rhode Island, which already has two slot parlors, will hold a referendum in November on whether to allow table games at one of them.

State-supported commercial, brick-and-mortar casinos are likely coming to a state, if not neighborhood, near you.

If that force weren't a threat enough to the Indian gaming industry, there is the December 23, 2011 decision to declare intrastate Internet gaming legal. The Las Vegas Sun headline, "DOJ opinion ‘important day’ in efforts to legalize online gaming," says it all.

It is widely believed that sooner or later the legalization of interstate iGaming will follow, meaning legalized Internet gaming throughout all of the United States.  Imagine Indian Country's best gaming patrons commencing play of Class III slot machines or other gaming devices on their laptop computers, from the comforts of their bedrooms and home offices.  That reality is in fact what is on the horizon.

Indeed, it is not a question of if the $26 billion tribal governmental gaming economy will recede as a result of mounting state and commercial gaming forces; it is a question of when -- and to what extent. So if you and your tribe aren't yet aggressively diversifying your  tribal economy away from sole reliance on gaming, what are you waiting for?

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.

Gabe Galanda to Speak to RES 2012 Assembly Twice

Gabe Galanda will be speaking at RES 2012, twice. As featured in this Indian Country Today Media Network article:

“Talking Sports Entertainment: Lessons to Be Learned” will feature Cherokee rapper Litefoot, NFL player Levi Horn, boxer George “Comanche Boy” Tahdooahnippah and lawyer/ICTMN columnist Gabriel Galanda.

Gabe will also speak during a breakout session on the "myths and realities" of limited tribal sovereign immunity waiver.

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.

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.