Tribe v. Tribe Test For Bankruptcy Code

The oft-debated question whether Tribal casinos are eligible for bankruptcy protection may be a little clearer next month, thanks to a recent case in the U.S. Bankruptcy Court for the Southern District of California. But what makes the case intriguing is the creditor challenging tribal entity eligibility for bankruptcy is another tribe. Bankruptcy watchers were sure there would be a challenge to Santa Ysabel Resort and Casino’s bankruptcy petition. But in a strange turn, the biggest creditor of the Casino’s owner – Iipay Nation of Santa Ysabel – is the Yavapai-Apache Nation. The papers and petition are available via Turtle Talk.

Note to future tribal casino bankruptcy petitioners: be prepared to defend your eligibility under the Code, especially if your largest creditor is an Indian Tribe. Lawyers for the Yavapai-Apache Nation tuned in quickly to the problems with Santa Ysabel’s petition:

Sections 109 and 101 of the Bankruptcy Code govern who may be a bankruptcy debtor. Specifically, § 109(d) limits eligibility for chapter 11 to “a person that may be a debtor under chapter 7 of this title” and a number of other entities not relevant here.

A necessary requirement for chapter 7 eligibility is that an entity fall within the definition of “a person.” 11 U.S.C. § 109(b). Section 101(41) provides that “[t]he term ‘person’ includes individual, partnership, and corporation, but does not include governmental unit.”

Because the Iipay Nation is a “governmental unit,” it cannot be a bankruptcy debtor.

On its voluntary petition the Debtor is listed as "Santa Ysabel Resort and Casino" and for type "Corporation (includes LLC and LLP )" is checked. This is odd since in the Omnibus Declaration the Casino’s GM states "The Debtor is an unincorporated company.” This might be important since, conceivably, although Chapter 11 won't apply to governmental units, including tribes, it could apply to a formally incorporated tribal business.

Many forecasted that tribal entity bankruptcy eligibility would be tested at the bottom of the downturn. But as tribal bankruptcy petitions continue to be filed – the Southeast Alaska Native village corporation Klukwan Inc. filed for bankruptcy this week – perhaps we are seeing tribal debtors testing the waters now, as they realize there is no relief on the horizon and no hope for workouts.

Anthony Broadman is a partner with Galanda Broadman in Seattle. His practice focuses on matters critical to Indian Country. He can be reached at anthony@galandabroadman.com.

Bar Bulletin: Supreme Court Justice Steve Gonzalez Honors Gabe Galanda

Washington State Supreme Court Justice Steve Gonzalez honors the work of Gabe Galanda in the latest King County Bar Association Bar Bulletin. The column, titled "Native Son," is available online here (abbreviated) and in reprint here (full).

In the courtroom, Gabe’s public exploits would be impressive for any lawyer, let alone a 36-year-old. In 2006, he helped spearhead litigation and subsequent settlement among the Lower Elwha Klallam Tribe, State of Washington and City and Port of Port Angeles regarding the Tse-whit-zen Village and ancestral burial ground. He has been at the forefront of state-tribal taxation issues in Washington. Whereas many firms advertise themselves as bet-the-company litigators, Gabe has developed into a bet-the-tribe lawyer. For example, through emergency federal court motion practice, Gabe recently helped a tribe halt the USDA’s attempts to barge solid waste from Hawaii to aboriginal lands in central Washington, where the tribe fishes, hunts and gathers roots and berries to this day, under an 1855 treaty with the United States. His record is clear on at least one thing: he pays little heed to the strictures of formal power structures. When Gabe believes tribal sovereignty or culture is threatened, he will fight – no matter the opponent.

Are Hopes for the HEARTH Act Too High?

With much tribal and media fanfare, on Monday the President signed into law the Helping Expedite and Advance Responsible Tribal Homeownership (HEARTH) Act, Pub. L. No. 112-151 (2012).  It was signed less than two weeks after the Senate passed the Act by unanimous consent.  According to the House Report on the bill:

Private investment within Indian reservations . . . is about as scarce as it is in any nation where ownership of property is highly restricted by national governments. Investors cannot afford to wait the months or years it may take for BIA approval of a simple lease executed with a tribe. . . . Fortunately, there are exceptions. In reservations where tribes have wisely contracted with the BIA to manage their own lands, productivity and health of the property dramatically improve.

As it stands, under 25 U.S.C. § 415 each and every lease of a tribe’s lands must still undergo federal review and approval by the Secretary of the Interior under a sprawling, burdensome set of regulations.  Approval is also subject to the National Environmental Policy Act, 42 U.S.C. § 4321, et seq., along with the usual delays and court controversies that protract the process.  It is not unheard of for several years to pass before Indian land can be leased, if at all.  Thus, a tribe who wants to govern its trust lands under free market principles cannot, in practice, do so.

Needless to say, the HEARTH Act has great expectations. The Act seeks to change the current scheme of Indian land leasing by – commonsensically – allowing tribes to lease their own land. (The “Homeownership” moniker to the Act is actually misleading; the HEARTH Act potentially applies to all non-mineral tribal land leases, not just those pertaining to Indian homesteads). The Act will give tribal governments the discretion to lease restricted lands for business, agricultural, public, religious, educational, recreational, or residential purposes without the approval of the Secretary of the Interior. Tribes are able to do so with a primary term of 25 years, and up to two renewal terms of 25 years each (or a primary term of up 75 years if the lease is for residential, recreational, religious or educational purposes).

The Act has been lauded as something that will “open the door to badly needed housing development on reservations, as well as wind and solar energy projects that tribes have been eager to launch.”  Senator John Barrasso (R-WY) says that it will once and for all “remove bureaucratic red tape and clear the way for Indian tribes to pursue homeownership and economic development opportunities”; Interior Secretary Ken Salazar says the Act “will have a real impact for individuals and families who want to own a home or build a business – generating investment, new jobs and revenues”; National Congress of American Indians President Jefferson Keel echoes the applaud, stating that the Act “will streamline business development and housing development and create jobs on reservations across the country.”

Although a good first step – a very good first step, with much potential – I am not as sold that the HEARTH Act will have such immediate effects, if it will have any effect at all.  First, before any tribal government can approve a lease, the Secretary must approve the tribal regulations under which those leases are executed (and mining leases will still require the Secretary's approval).  Second, before the Secretary can approve those tribal regulations, the tribe must have implemented an environmental review process – a “tribal,” or “mini” NEPA –that identifies and evaluates any significant effects a proposed lease may have on the environment and allows public comment on those effects.

One need only look to the energy arena to determine the future of the HEARTH Act. In 2005, Congress enacted 25 U.S.C. § 3504, which included provisions for implementation of a Tribal Energy Resource Agreement (“TERA”).  Essentially, the law operates much like the HEARTH Act.  It (1) allows tribes to enter into a master agreement (the TERA) with the Secretary of the Interior, which then (2) grants the tribe the ability to enter into leases and to grant rights of way across tribal lands without Secretarial approval.

To date, however, not one tribe has entered into a TERA.  For many tribes, the cost simply outweighs the benefits – TERAs allow tribes the leeway to skip Secretarial approval, “but only on terms dictated by the federal government rather than on the tribes’ own terms.”  Like the HEARTH Act, the TERA requires that tribes create a NEPA-like environmental review process and comply “with all applicable environmental laws.”  And tribes simply do not have the resources necessary to fulfill the host of NEPA requirements, which impose an extremely heavy burden on tribal governments to demonstrate that they have the requisite expertise, experience, laws, and administrative structures in place to assume the responsibility of a TERA.  According to Indian law scholar Judith V. Royster, “[f]ew tribes at present have the in-house geologists, engineers, hydrologists, and other experts, or the financial wherewithal to hire or train them,” in order to provide the tribe with the capacity necessary to obtain Secretarial approval under the TERA regulations.

Of course, the HEARTH Act authorizes the Secretary to provide a tribe, upon the tribe’s request, technical assistance in developing a regulatory environmental review process. But this takes time and money.  And the Secretary, given all of the BIA’s other demands, is perennially short on time when it comes to launching new initiatives such as this one. Further, Congress has shown time and time again that it is willing to pass these laws, but not to fund them; Congress should not be expected to authorize one red cent to support the HEARTH Act’s implementation.

Time will tell whether the HEARTH Act proves to be any success at all.  Until then, the “Expedite” part of the HEARTH Act’s title seems a bit too optimistic.

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.

TOGA Senate Hearing Reveals Little; NIGC Reveals Even Less

We don’t know any more about the Tribal Online Gaming Act (TOGA) than we did before the Senate Committee on Indian Affairs held its oversight hearing on the discussion draft of the legislation last week. What we do know is that the NIGC is going to have be pushed into the fray if it is to have any regulatory role in online gaming. Despite wise reflection from Elizabeth Homer that the NIGC is the proper federal regulatory authority for online Indian gaming, the NIGC continues to bury its head in the sand – perhaps by political design.

For months, the NIGC has refused to openly involve itself in any manner in online Indian gaming, because: “None of the Internet gaming bills currently pending before Congress provide NIGC with a regulatory role. NIGC is not in a position to speculate on the particulars of any legislative proposal for which there is no clear role contemplated for NIGC,” as NIGC General Counsel Larry Roberts put it last November.

Last week’s input by the NIGC was even more empty. Despite a discussion draft of TOGA that included Department of Commerce oversight, the NIGC did not comment substantively on the arrival of online Indian gaming. Chairwoman Stevens did not mention Internet gaming once in her prepared comments, and deflected questions as Mr. Roberts had previously.

Instead, the NIGC’s input was limited to discussing the status of tribal gaming and an update on the Commission’s progress in achieving its four priorities: consultation and relationship building; training and technical assistance; regulatory review; and agency operations. In other words, the NIGC was totally off-topic – which is a shame because Internet gaming is coming to Indian Country, whether we like it or not, and because internet gaming falls squarely within the NIGC’s mission: regulating Indian gaming, shielding tribes from corrupt influences, ensuring fair play, and, most importantly, ensuring that Indian tribes are the primary beneficiaries of gaming revenue.

Recall that the NIGC routinely involves itself in situations where it has no legal authority to do so. Why? Because it is necessary to support tribal governmental gaming, per the agency’s mission. Take for instance the NIGC’s post-CRIT advancement of Class III MICS. In Colorado River Indian Tribes v. NIGC (CRIT), 383 F. Supp. 2d 123 (D.D.C. 2005), NIGC’s authority to enforce Class III MICS was struck down because “while surely well- intentioned, the NIGC ha[d] overstepped its bounds” in promulgating and enforcing the MICS. Yet last week – again in an Internet gaming hearing – the NIGC reported that it is still using the MICS to provide technical assistance and training. Again, Class III MICS, while potentially prudent as an advisory mechanism, are gratuitous and are much further afield from the NIGC’s core authority than involvement in Internet Indian Gaming. The NIGC must “protect [Indian] gaming as a means of generating tribal revenue.” 25 U.S.C. § 2702(3).

Why then does it refuse to champion tribal governmental gaming in the Internet context, when it clearly could? Only time will tell.

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

Rapid City Journal Announces Galanda Broadman's Representation of Vern Traversie

Rapid City Journal reports that:

A South Dakota judge is allowing three lawyers from Washington to help represent a Native American man who has filed a civil lawsuit claiming the letters KKK were carved into his stomach at a hospital.

Court documents show that Judge Jeffrey Viken is allowing Gabriel Galanda, Anthony Broadman and Ryan Dreveskracht, all of Seattle, to take part in proceedings on behalf of Vern Traversie. The three men are admitted to practice in Washington but are not members of the South Dakota Bar.

Traversie is a 69-year-old Lakota man who lives on the Cheyenne River reservation. Though he is blind, Traversie says others have told him the scars left form the letters. He is suing the hospital where the surgery took place, its board of directors and others.

Turtle Talk has published the Complaint filed by Iron Eyes Law Offices and Galanda Broadman.

Judicial Warning to Tribes to Avoid State Incorporation

Before any tribal government forms an enterprise under state law or seeks to do business beyond Indian Country, it should consider this week's indictment of tribal sovereign immunity by a Tenth Circuit Court of Appeals Judge in Somerlott v. Cherokee Nation Distributors.

CND, LLC wants sovereign immunity. But CND, LLC is in the business of manipulating spines for profit. It serves mostly non-Indians and operates off reservation. It was formed under Oklahoma’s limited liability statutes. . . .

[S]overeign immunity has never extended to a for-profit business owned by one sovereign but formed under the laws of a second sovereign when the laws of the incorporating second sovereign expressly allow the business to be sued. And it doesn’t matter whether the sovereign owning the business is the federal government, a foreign sovereign, state — or tribe. . . .

Neither can we doubt that the Nation lacked for choices when it came to organizing CND — or that good reasons exist for the choice it made. The Nation could have chosen to operate the chiropractic clinic itself and enjoy immunity for its operations. . . .

The moral of this story: Tribes should avoid state incorporation of their enterprises whenever possible. Instead, tribes should charter their businesses under tribal law, or perhaps Section 17 of the IRA (yet heeding caution about sue-and-be-sued-clause immunity waiver as to the latter). I recognize that certain tribal economic development efforts require an entity formed under state law but that should be the exception to the rule.

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 assists tribal governments and businesses in all matters of tribal economic development and diversification, including entity formation and related tax strategy. Gabe can be reached at 206.691.3631 or gabe@galandabroadman.com.

TOGA, TOGA! SCIA Kicks Off The Tribal Online Gaming Party

Earlier this summer it looked like a federal online gaming solution was unlikely in the face of recent piecemeal moves by states to legalize Internet play. But today’s Senate Committee on Indian Affairs Oversight hearing on Regulation of Tribal Gaming: From Brick & Mortar to the Internet suggests that reports of the demise of the federal regulatory solution were grossly exaggerated. In fact, the Committee has published a discussion draft of the “Tribal Online Gaming Act of 2012” or “TOGA.”

Expect this draft to be discussed in depth today at 2:15 p.m. eastern by a panel of experts and insiders. Testimony will be available via webcast.

If TOGA has legs, expect it to be debated heavily. Some of TOGA’s critical points:

• Any federalization of online gaming must provide positive economic benefits for Indian tribes since such a program would create thousands of jobs within the United States. • “Tribal online gaming” means only online poker. • The Secretary of Commerce shall oversee and regulate tribal online gaming – not the NIGC. • Tribes, consortiums of tribes, and “a consortium of tribe(s) and non-tribal entities” could be operators. • No Indian lands requirement appears to exist. • TOGA is not intended to affect compacts or cause them to be renegotiated. • A most-favored-games clause would allow tribes to offer games as they become legal – ostensibly beyond poker. • No state taxation of tribal online gaming revenue.

So, the TOGA party has started. Will it get busted (by the Congress)? If not, which tribal governmental operators will be let into the TOGA party? And which will be left out? The tribal online gaming fun has now officially begun.

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

DOJ Supports Indian Prisoners' Religious Rights

In an landmark statement of federal support for Indian prisoners' rights to freely practice tribal religion, the Department of Justice filed a Statement of Interest with a South Dakota federal district court, supporting the Native prisoners' use of traditional tobacco during worship. Gabe Galanda recently published a paper, "Protecting Indian Prisoners' Religious Freedoms," which cited various federal legal authorities on the topic:

To be clear, Native inmates “do not forfeit all constitutional protections by reason of their conviction and confinement in prison.” Bell v. Wolfish (1979). Rather, they enjoy free exercise rights protected by the federal First Amendment. Pell v. Procunier (1974). Despite a U.S. Supreme Court decision in 1987 that supplanted the longstanding strict scrutiny basis for review with a “legitimate penological interest”-test, Turner v. Safley (1987), restrictions on Native prisoner religious practices such as sweat lodge ceremonies have been held to unlawfully infringe upon such a prisoner’s right to “free exercise” of religion. See e.g. Thomas v. Gunter (8th Cir. 1994). Further, some state constitutions, like Washington State’s, afford more protection for religious freedoms than the federal First Amendment. First Covenant Church v. City of Seattle (1992).

In 2000, Congress passed the Religious Land Use and Institutionalized Persons Act (RLUIPA), to restore the strict scrutiny test for prisoner religious freedom claims. Under RLUIPA, a prison cannot substantially burden an inmate’s religious exercise unless the imposition of the burden on that person “is in furtherance of a compelling governmental interest” and is the “least restrictive means” of furthering that interest. Ahmad v. Furlong (10th Cir. 2006). Accordingly, federal courts have affirmed the rights of Native prisoners to use tobacco for religious ceremonies, Native American Council of Tribes v. Weber (D.S.D. 2011), and to participate in talking circles and pipe and drum ceremonies, Meyer v. Teslik (W.D. Wis. 2006).

As an overlay, the American Indian Religious Freedom Act (AIRFA) of 1978 announced the United States policy to “protect and preserve for American Indians their inherent right of freedom to believe, express, and exercise the traditional religions.” Although AIRFA does not create a cause of action,” Lyng v. Northwest Indian Cemetery Protection Assoc. (1988), the law has been cited as persuasive authority in a number of cases concerning the religious rights of America’s first peoples—including those who live behind bars.

Kudos to the DOJ and the South Dakota U.S. Attorney's Office for standing in support of Indian prisoners' religious rights and traditional tobacco use -- and the free exercise of Indian religion at large.

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 can be reached at 206.691.3631 or gabe@galandabroadman.com.

Gabe Galanda to Address UN-Geneva Re: American Indian Treaties and Consultation

Gabe Galanda will visit Geneva, Switzerland on July 16 and 17, 2012, to address the United Nations Office of the High Commissioner for Human Rights, during a forum titled, “Strengthening Partnership Between Indigenous Peoples and States: Treaties, Agreements and Other Constructive Arrangements." Gabe, an enrolled member of the Round Valley Indian Tribes of California, will speak at the UN Palais des Nations on July 17 during a session titled, “Highlights of country-level experiences concerning treaties, agreements and other constructive arrangements.”

He will speak along with indigenous leaders from South Africa, Costa Rica, Bangladesh, New Caledonia, Canada, Mexico, Columbia and Kenya, regarding the processes, principles and other essential elements of the negotiation and elaboration of new agreements or other constructive arrangements as well as the effective recognition of historical treaties.

“The invitation to join the leaders of indigenous nations and nation-states and address the U.N. human rights tribunal in Geneva is one of the highest honors I have ever received,” said Galanda. “I look forward to contributing to international discourse concerning the rights of indigenous peoples vis-à-vis their sister sovereigns, and to helping advance the American Indian consultation right towards one of informed consent.”

Gabe’s remarks and paper are titled, “American Indian Treaties: The Consultation Mandate." In particular, he will address domestic federal recognition and breach of Indian treaties, and modern practices of federal-tribal government-to-government consultation, particularly in relation to the U.N. Declaration of the Rights of Indigenous Peoples (DRIP) that President Obama endorsed on December 16, 2010. Indian treaties are to be recognized as the Supreme Law of the Land according to Article VI of the U.S. Constitution.

Gabe has been critical of the United States government for its breach of the U.N. DRIP (“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”); and its violation of fundamental consultation tenets between sovereigns (“other federal agencies completely missed the memo on tribal consultation – literally President Obama’s Tribal Consultation Memorandum – and, in specific instances, have failed to meaningfully consult with tribal governments concerning federal activity”). He maintains that a “treaty consultation obligation arises, in part at least, from the implicit duty to consult that is intrinsic in any bilateral agreement between nations.”

Gabe is a Partner with Galanda Broadman, PLLC, an American Indian-owned law firm in Seattle dedicated to advancing tribal legal rights and Indian business interests. His practice focuses on complex, multi-party litigation and crisis management, representing tribal governments and businesses and Indian citizens. Gabe has prosecuted various actions against the United States and for breach of Indian treaties and federal Indian consultation laws.

He has been selected to The Best Lawyers in America® from 2007 to 2012, and was named as one of the best lawyers in Washington State by Puget Sound Business Journal in 2011. Gabe was named to the Puget Sound Business Journal’s “40 Under 40” list, as well as to the National Center for American Indian Enterprise Development’s “Native American 40 Under 40” list in recognition of his status as an emerging leader in the legal industry, in 2009. Washington Law & Politics/Super Lawyers magazine named Gabe a “Rising Star” for ten of the last twelve years, most recently this year, and Washington Law & Politics named him one of Washington’s four Leading Edge Litigators in 2003. He was awarded the Washington State Bar Association Young Lawyers Division’s Outstanding Young Lawyer Award, and the Northwest Indian Bar Association’s Native Justice Award, in 2004.

Gabe was born and raised in Port Angeles, Washington. At Peninsula College, he received his A.A. from Peninsula College in 1995, and served as Associate Student Body President there in 1994-95. Gabe received his B.A. in English Literature from Western Washington University in 1997, and his J.D. from the James E. Rogers College of Law at the University of Arizona in Tucson, in 2000. At Arizona, he served as President of the Native American Law Students Association in 1998-99 and Note Editor for the Journal of International and Comparative Law in 1999-2000.

Gabe Galanda Quoted By Boston Public Radio on Mashpee Situation

Gabe Galanda was quoted this morning in a Boston public radio story, Big Hurdles Remain For Mashpee Wampanoag Taunton Casino, regarding the Mashpee Wampanoag's efforts to have land taken into trust for purposes of gaming.

[Y]ou’ll remember that the Masphee became federally recognized as at tribe, officially, a few years ago. So thanks to [Carcieri], right now, the Mashpee can’t turn that land in Taunton into tribal land, which means they can’t build a casino on it.

I spoke with Gabe Galanda, he’s an expert in tribal law:

I think the situation they’re in is tragic. The state and local support of the tribe certainly does not hurt them. But the Secretary of the Interior remains without legal authority to take that land into trust.

That sounds pretty definitive.

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 assists tribal governments and businesses in all matters of tribal economic development, including gaming. Gabe can be reached at 206.691.3631 or gabe@galandabroadman.com.