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BD/ED and welfare reform in Indian country are taking place in a unique legal, historical, and cultural context. The legal status of tribes creates opportunities and challenges for their BD/ED. Historical events disrupted or destroyed many traditional tribal economies, and the legacy of these events continues to reverberate through tribal economies. Cultural values, norms, and expectations exert a strong influence on tribal BD/ED. The federal government has promoted BD/ED in Indian country through specific programs and legislation as well as through support of Indian self-determination and self-governance. This chapter discusses key principles of Indian law, special legal provisions for Alaska Native villages and tribes, historical and cultural circumstances that shape tribal BD/ED activities, and current federal support of tribal BD/ED.
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The legal status of tribes and Alaska Native villages affects their economies, relations with governments (federal, state, county, and local), and relations with private-sector businesses. This legal status is reflected in treaties, legislation, and administrative and judicial decisions. Collectively, these treaties, statutes, and administrative and judicial decisions are often referred to as "Indian law." Seven principles of Indian law are critical to BD/ED in Indian country, and generally apply to Alaska Native villages as well: (1) the primacy of the federal government in Indian affairs, (2) the plenary power of Congress, (3) trust relationship, (4) tribal sovereignty, (5) tribal reserved rights, (6) canons of construction of Indian law, and (7) Indian self-determination and self-governance (American Indian Research Institute 1998). Each of these sometimes contradictory principles is discussed below.
Federal Primacy in Indian Affairs. One of the first principles of Indian law is the primacy of the federal government in Indian affairs. After the establishment of the United States, relations with Indian tribes became the prerogative of the federal government.(1) Article I, section 8, clause 3 of the Constitution, known as the "Indian commerce clause," says: "Congress shall have Power . . . to regulate Commerce with foreign nations, and among the several States, and with the Indian tribes." The Indian Trade and Intercourse Act of 1790, known as the "Nonintercourse Act," brought Indian affairs under exclusive federal control by:
Federal primacy in Indian affairs has important implications for BD/ED in Indian country:
Plenary Power of Congress. Pursuant to its plenary powers, Congress may abrogate or modify any tribal right or privilege established by treaty, statute, or other document. Subject only to the Constitution, Congress can advance, limit, or control much of Indian commerce and related affairs. Indian self-determination, self-governance, and commerce are ultimately subject to the control of Congress.(2) For example, in passing the Indian Gaming Regulatory Act (Public Law 100-497), Congress required tribes to negotiate compacts with states setting parameters for gaming on tribal lands.(3) In exercising its plenary powers, Congress has granted federal recognition to some tribes and has terminated the recognition of others.
Trust Relationship. Tribes are regarded as "domestic dependent nations." The relationship of these nations to the United States "resembles that of a ward to his guardian."(4) Under this principle, the United States, often through the BIA in the Department of the Interior, serves as a trustee for each tribe. Sometimes there is tension or conflict between the roles and responsibilities of the United States as a trustee and other principles of Indian law, such as tribal sovereignty, reserved rights, and self-determination.
The trust relationship affects BD/ED in Indian country in several ways:
One of the tribes participating in the study, Citizen Potawatomi, has taken over management of its trust funds, which include millions of dollars generated by successful land claims against the United States.(6) Tribal officials reported a 300 percent increase in its trust account revenues after taking over management of the tribe's trust funds. This increase in revenues was generated by investing the funds in money market and other low-risk instruments that pay higher interest than was earned when the funds were managed by the BIA.
Tribal Sovereignty. Tribal governments are sovereign within tribal (reservation) territory and thus are not subject to state or any other laws other than federal laws without the consent of Congress. The exercise of tribal sovereignty can have mixed effects on BD/ED in Indian country:
While tribal sovereignty and federal primacy tend to insulate tribes from interference by states, Congress has limited tribal sovereignty in important areas such as gaming, as noted above, law enforcement, and issuance of tax-free bonds. In passing Public Law 83-280 in 1953, Congress gave jurisdiction of criminal offenses and civil actions involving Indians and Alaska Natives to certain states (AK, CA, MN, NE, OR, and WI).
Tribal Reserved Rights. The rights of the tribes, as prior and continuing sovereigns, to land, self-government, and other domains exist inherently rather than as grants from the United States. This principle, together with the canons of construction (discussed below), tends to help tribes exercise their sovereignty with respect to BD/ED and other areas despite resistance from governments (federal, state, county, regional, or local), businesses, and individuals.
Canons of Construction of Indian Law. In a number of decisions over time, federal courts have come to interpret written documents (such as treaties, statutes, and executive orders) as being developed to benefit tribes — to be construed broadly in determining the existence of Indian rights, but narrowly when considering the abrogation or elimination of those rights (Blurton 1999). For the most part, the canons of construction have benefited tribes in disputes with the federal and state governments pertaining to the exercise of tribal sovereignty.
Indian Self-Determination and Self-Governance. Since the 1970s, federal policy has supported Indian self-determination and self-governance, promoting a "government-to-government" relationship between the United States and tribes. Federal support of Indian self-determination and self-governance includes the enactment of statutes by Congress and the implementation of programs, regulations, and initiatives by most federal departments and agencies, all promoting Indian self-determination (U.S. Department of Health and Human Services 2003).(7)
For example, since 1975, tribes have the option of taking over operation of all or a portion of their education and, subsequently, their health programs. Under The Indian Self-Determination and Educational Assistance Act (ISDEAA), as amended, tribes have the option of taking over the operation of any program designed "for the benefit of Indians because of their status as Indians." In addition, tribes have been able to operate education, training, and employment programs, such as Job Training Partnership Act (JTPA) and Native Employment Works (NEW), funded by the Department of Labor (DOL) and DHHS, respectively. The Balanced Budget Act of 1997 gave the tribes the opportunity to take responsibility for the relatively small WtW program, and PRWORA authorized tribes to operate the relatively large TANF program.
With respect to BD/ED, Indian self-determination has meant that tribes have opportunities to control the assets and resources that affect their members and lands. As tribes have taken over the operation of federally funded programs, they have created jobs and have tended to fill these jobs with tribal members who reside on or near the reservation.(8) Many tribes have replaced federal agencies (such as the Bureau of Indian Affairs [BIA] and Indian Health Service [IHS]) as the largest employer on the reservation. The increased payroll and associated expenditures by employees residing on or near the reservation stimulates the reservation economy, and the employees gain experience that increases their capabilities and value to the tribal government and other future employers.
While taking over operation of federal programs has provided a significant economic stimulus for many tribes, some have experienced problems with obtaining full funding for such programs. When a tribe takes over the operation of a program previously operated by a federal agency, the contract or compact may include funds for both direct program operation and for contract support costs (CSCs).(9) CSCs are costs that are not included in the amount allocated for operation of the program. CSCs may be paid for: 1) start-up and pre-award costs for one-time expenditures needed to assume operation of the program, 2) indirect costs that are the pooled administrative costs of tribes, and 3) other unpaid costs directly associated with the program. (10) Tribes have argued that ISDEAA requires the federal government to pay 100 percent of CSCs, but full funding of tribal CSCs has not been appropriated by Congress. This disparity has resulted in Congressional oversight hearings and litigation between several tribal governments and the IHS and BIA.(11)
While CSCs awarded to tribes contribute to program operation and to the tribal economy, informants at several of the tribes in the study said that failure to include all the requested CSCs in federal contracts and compacts with tribes makes it difficult for a tribe to operate the program at the same level the government did. Informants reported that shortfalls resulting from less than full CSC funding sometimes have forced cuts in the level of services for health care, education, and other programs. This problem has been studied and has given rise to several lawsuits against the BIA and DHHS (see, for example, General Accounting Office 1999; Ramah Navajo Chapter v. Lujan 112 F.3d 1455, 1461 [10th Cir. 199]; and Shoshone-Bannock Tribes v. Secretary, 279 F.3d 660, 663 n.5 [9th Cir. 2002]).
All the tribes in the study have taken over the operation of programs formerly operated by the federal government. Each of the tribes operates its police force and court system, social services, and natural resource programs formerly operated by the BIA. Five of the eight tribes in the study operate hospitals or health clinics formerly operated by the IHS. Several of the tribes in the study operate all or part of their educational systems, elementary and secondary schools, or colleges. All the tribes in the study operate Head Start and adult and vocational education programs. Three of the tribes in the study operate a TANF program.
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Passage of the Alaska Native Claims Settlement Act (ANCSA) in 1971 radically changed the way the United States deals with Indian tribes and Native villages in Alaska and dramatically affected the path of BD/ED for Alaska Natives. What is now Alaska is the aboriginal home of several Indian tribes and many Alaska Native groups, including Athabascan Indians, Aleuts, and Inuit (called Eskimo by some).(12) Before 1971, the United States dealt with Indians and Native groups in Alaska in a fashion similar to that used with Indian tribes in the lower 48 states: through treaties, legislation, and executive orders. ANCSA extinguished native land claims to almost all of Alaska in exchange for about one-ninth of the state's land plus $962.5 million in compensation. By conveying Native land title to 12 regional and 200 local village corporations chartered under Alaska state law, ANCSA changed the relationship between Natives and the land from one of co-ownership of shared lands to one of corporate shareholding (that is, land ownership was based on a corporate model). After ANCSA, Native villages serve members and Native village corporations, and Native regional corporations serve shareholders.(13)
In enacting ANCSA, Congress sought to end, in Alaska, the supervision over Indian affairs that had previously marked federal Indian policy. The settlement of the land claims was to be accomplished "without litigation . . . without creating a reservation system or lengthy wardship or trusteeship." To this end, ANCSA revoked "the various reserves set aside . . . for Native use" by legislative or executive action, and completely extinguished all aboriginal claims to Alaska land. In return, Congress authorized the transfer of $962.5 million in federal funds and 44 million acres of Alaska land to 12 original state-chartered private business corporations that were to be formed pursuant to the statute. The shareholders of these corporations were limited to Alaska Natives. The ANCSA corporations received title to the transferred land, and no federal restrictions applied to subsequent land transfers by them (see Alaska, Petitioner v. Native Village of Venetie Tribal Government et al. Supreme Court Decision 96-1577). The 12 Native corporations and Native village corporations operate very differently from most Native villages and Indian tribes. They have stockholders, substantial liquid assets, and are governed by a board of directors.
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Current BD/ED activity in Indian country cannot be fully understood without reference to historical events that continue to reverberate in reservation economies. European colonization of the Americas, wars, and subsequent policies of the United States resulted in loss of tribal land and population, disruption of tribal economies, and increased tribal dependency on the federal government. The legacy for BD/ED includes economic costs associated with the loss of land and natural resources, complicated patterns of land ownership, and a distrust of outsiders with respect to tribal commerce.
Conflict with the American colonies and subsequently with the United States had many negative consequences for Indian tribes and Native villages. Population loss due to war, starvation, and disease caused more than 100 tribes to cease to exist. Many surviving tribes (there are currently over 550 federally recognized tribes, including Alaska Native villages) were forced to leave their homelands and were restricted to reservations. These losses made many tribes dependent on the federal government for food, shelter, health services, education, and welfare (Sturtevant, 1907).
Federal "assimilation" policy, which attempted to terminate reservations and induce Indians to abandon their languages, religions, and cultures and adopt the ways of European Americans, dealt another blow to tribes in the last part of the 19th century. The effects of the General Allotment Act of 1887, also known as the Dawes Act, are still apparent on reservations today. The Dawes Act authorized the BIA to allot parcels of reservation land to individual Indians. Each Indian's allotment was to remain in trust (exempt from state laws and taxation) for 25 years. Portions of the reservation that were not allotted were declared "surplus land" and opened to non-Indians for homesteading. Tribes were compensated for whatever land was sold. The Dawes Act had serious effects:
In planning and executing current development efforts that relate to allotted land, a tribe faces problems similar to those of other governments in trying to promote development and the general welfare of its citizens while respecting the rights and desires of individual property owners. Sometimes the latter is inconsistent with the former. For example, the Gila River reservation includes 372,000 acres of which 100,000 are allotted lands in 10-acre parcels, some with 40 persons (generally heirs of the original allottee) having an interest. The tribe plans to redevelop an abandoned airfield built by the Army on the reservation in the 1940s. The land next to the airport is mostly allotted land, and the tribe is having difficulty securing agreement of the many owners for the planned development. The tribe is considering a self-governance compact to take over operation of the realty office from the BIA and, perhaps, buying out small owners so that the tribe can develop the land.
The history of conflict and maltreatment seems to influence contemporary tribal BD/ED. Informants at some of the participating tribes said that a general mistrust of non-Indian or off-reservation businesses and people results in a focus on internal development. Notwithstanding a lack of investment capital, some tribes in the study tended to plan for and to develop "home-grown" initiatives rather than seek off-reservation businesses to locate facilities or to co-invest on the reservation. At these tribes, most development planning focused on ideas developed by tribal programs or individuals. Initiatives involving partnerships with businesses outside the reservation economy of such tribes were rare. While some of these tribes coordinate development planning in a regional context, working with adjacent counties or regional economic development organizations, informants expressed little enthusiasm for such coordination.
There are, however, important exceptions to the inward focus on tribal BD/ED. Mississippi Choctaw started their modern economic development with the construction of an industrial park and a nationwide recruitment campaign to attract businesses to locate plants on the reservation. The Choctaw have continued this expansive vision by locating tribally owned businesses off their reservation and by entering into partnerships with non-Indian businesses. Other tribes participating in the study (Cheyenne River Sioux, Gila River, Turtle Mountain Chippewa), in part influenced by the success of the Choctaw, have opened business or industrial parks on their reservations and seek non-Indian tenants. The Citizen Potawatomi tribe purchased and operates a bank located in nearby Shawnee, Oklahoma. The First National Bank of Shawnee operates like any local bank, with tribal members representing a minority of the bank's customers. Navajo Nation has granted a lease to Peabody Coal Company to mine coal on its reservation and works with a consortium of power companies in operating the coal-fired Four Corners power generation facility that provides electricity to Arizona, California, and New Mexico.(15)
The two Native corporations in the study were much more open to working with and investing in businesses and activities outside the villages of their shareholders. Alaska Native communities share with American Indian communities a history of abuse and exploitation during the colonial period and after; many Alaska Native groups share a distrust of non-Native businesses. Nevertheless, the Alaska Native corporations have invested broadly in the economy of the United States. Study informants suggested several reasons for this openness to investment outside their Native communities:
While profitable investment opportunities in the remote Native villages are scarce, the Native corporations do seek to promote BD/ED in their constituent Native villages. For example, Doyon created Doyon Tourism, Inc. to promote tourism in its region. Doyon's land and natural resources department manages its ANCSA lands, generates income and job opportunities for shareholders, and promotes traditional shareholder uses of Doyon lands. The Bristol Bay Native Corporation maintains a directory of businesses owned by its shareholders and works with the Bristol Bay Health Corporation and Bristol Bay Native Association to promote job opportunities in the region.
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There was diversity within and among tribes/Native corporations in the study with respect to the value and limits of BD/ED. At each site, there were individuals and groups with strongly held positions about development that can be classified as (1) traditionalist, (2) conservationist, and (3) pro-development. Each of these positions is described below.
The "traditionalist" position holds that traditional culture and values are fragile and have long been undermined by forces inside and outside the tribe. Consequently, most decisions should reflect preservation of traditional culture and values. Any BD/ED initiative that is judged to be inconsistent with traditional values should be rejected — cultural preservation trumps potential benefits of BD/ED. One informant said that, despite the promised economic benefits of job creation and profits, his tribe would not permit a "Disney World" to be constructed on the reservation, because such an enterprise would be incompatible with the tribe's culture and ways. The desire to protect tribal culture and values was often accompanied by a mistrust of non-Indian developers and businesses. Informants cited a long history of illegal expropriation of Indian lands and natural resources by individuals, states, and the federal government as the basis for this mistrust.
An example of how traditionalist cultural values can affect BD/ED was described by officials at Navajo Nation. Most of the land on their reservation suitable for commercial development has been assigned grazing permits held by individual tribal members. Sheep herding and animal husbandry are traditional Navajo occupations and are central to Navajo culture. Consequently, elected Navajo politicians are reluctant to force, through the exercise of eminent domain, a grazing permit holder to relinquish his or her permit for the sake of development — especially if the permit holder is a tribal elder. Informants said that many development projects have been scuttled because one or more grazing permit holders refused to approve the project. Like other communities, Indian and non-Indian, Navajo Nation has rejected developing Class III gaming on the reservation primarily because of cultural and other values.
The "conservationist" position is similar to the traditionalist one, but with environmental rather than cultural preservation the core value. However, the two positions are not incompatible — at each study site informants said that many tribal members are both traditionalist and conservationist, and reject any BD/ED initiative they judge would harm either the environment or tribal culture or values.
The "pro-development" position holds that BD/ED on the reservation can significantly contribute to the solution or amelioration of many problems, such as unemployment, poverty, poor academic achievement, and substance abuse. Such views lead people with a pro-development position to be the strongest advocates of BD/ED on the reservation. At every study site, there were individuals and groups that favored development and viewed most potential development as compatible with cultural preservation. Some tribal officials viewed concerns about the cultural compatibility of businesses and mistrust of non-Indians as unnecessary barriers to most BD/ED. One informant said, "Other tribes haven't figured out that you don't stop being an Indian just because you have a job."
Those taking the pro-development position tended to be more amenable to working with non-Indian persons and businesses. Tribal officials at Choctaw said the tribe has reached out aggressively to non-Indian businesses. The tribe has established businesses outside the reservation (in other states and Mexico) and has recruited Fortune 500 corporations to establish operations on its reservation.
Each of the tribes/Native corporations in the study pursued BD/ED to generate wealth for the tribe or Native association and to generate jobs, including self-employment, for tribal members. However, tribes varied in the relative emphasis they placed on these two goals. While most tribes emphasized job creation over wealth creation or profits, the two Alaska Native corporations value asset protection and profits over job creation. The Native corporations have fiduciary responsibility to act prudently to protect and expand corporate assets originally created by ANCSA.
Given the high rates of unemployment at most of the tribes, there is strong political/social pressure for job creation. Some tribal officials described a paradox in managing a company with the aim of employing people as opposed to making profits and creating growth. They observed that managing a company to create and maintain jobs has been the downfall of many tribal businesses. Over time, such businesses tend to have difficulty in reducing costs by discharging employees, so they become unprofitable, ultimately going bankrupt or becoming a drain on tribal resources. In contrast, businesses that are managed for profit and/or expansion have a greater chance of becoming profitable, and profitability is associated with longevity.
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Congress has enacted laws designed to promote BD/ED in Indian country, and there are about 100 federal programs to assist tribes or tribal members with BD/ED activities (General Accounting Office 2001). Federal programs that support preferential employment for disadvantaged populations, BD/ED in rural areas, and BD/ED in poor communities with high unemployment are potential sources of support for initiatives in Indian country (Appendix A lists selected legislation and study sites affected by each initiative). The descriptions of tribal BD/ED activities in the following chapter will illustrate how tribes have benefited from these federal initiatives.
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(1) Prior to the establishment of the United States, Indian tribes negotiated treaties with colonial representatives of the British, Dutch, and Spanish Crowns.
(2) See United States Code; Title 25, Chapter 21, Section 1901. Supreme Court decisions have supported Congressional control over Indian affairs-see Santa Clara Pueblo v. Martinez; 436 U.S. 49 (1978), and Lone Wolf v. Hitchcock; 187 U.S. 553 (1903).
(3) The Act establishes three classes of games with a different regulatory scheme for each. Class I gaming is defined as traditional Indian gaming and social gaming for minimal prizes. Regulatory authority over Class I gaming is vested exclusively in tribal governments. Tribes retain their authority to conduct, license, and regulate Class II gaming (bingo and similar games of chance) so long as the state in which the tribe is located permits such gaming for any purpose. A tribe can operate Class III gaming (casino-type games) only if the particular form of Class III gaming is permitted in the state in which the tribe is located.
(4) This principle has been developed primarily in decisions of the Supreme Court, such as Cherokee Nation v. Georgia 30 US (5 Pet.) 1,8 L. Ed25 (1831) and Worchester v. Georgia, 6 Pet. 515 (1832).
(5) The judge in the case, Royce Lambreth, has found Secretaries of the Interior and Assistant Secretaries of Indian Affairs to be in contempt for failing to comply with his orders and rulings. See, for example, [www.usdoj.gov/civil/cases/cobell].
(6) In accordance with the Indian Self-Determination and Education Assistance Act of 1975, as amended (discussed in the next section), tribes can take over the operation of many programs formerly operated by the BIA. Citizen Potawatomi was one of the first tribes to take over management of its trust funds.
(7) Examples of laws passed by Congress include the Indian Self-Determination and Education Assistance Act of 1975, ISDEAA (PL 93-638), subsequently amended and expanded; the Indian Employment, Training, and Related Services Demonstration Act of 1992 (PL 102-477); the Department of Agriculture Reorganization Act of 1994 (7 U.S.C.6941 et seq.); the Native American Housing Assistance and Self Determination Act of 1996, NAHASDA, (PL 104-330); and the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PL 104-193).
(8) When a tribe takes over the operation of a program previously operated by a federal agency, even if the tribe retains the former staff, the jobs are new to the tribe and, thus, were "created."
(9) Direct costs are those costs that can be identified specifically with the federally-funded program, or that can be directly assigned to program activities relatively easily with a high degree of accuracy. Typical direct costs are the compensation of employees for work performed under the federally funded program, and the costs of materials consumed or expended in the performance of the work.
(10) Indirect costs are costs incurred for common or joint objectives and, therefore, cannot be identified readily and specifically with a particular project or program, Indirect cost items contribute to the ability of the tribe to support one or more programs. Such costs are normally classified under the following categories: depreciation and use allowances, general administration and general expenses, and operation and maintenance expenses. Indirect costs stem from providing program space and administering the activities, rather than from the actual performance of the program activities.
(11) Indian Health Service, 2001 (http://info.ihs.gov/Resources/Resource3.pdf.)
(12) The Inuit include the Inupiat and Yupik peoples.
(13) There are 12 regions in Alaska, each with a Native corporation created by ANCSA. A thirteenth regional Native corporation was created for Alaska Natives who had left the state and were not shareholders in one of the 12 regional corporations.
(14) The Dawes Act was not enforced on every reservation, so some reservations do not have checkerboard land ownership. Six of the eight tribes in the study have a checkerboard reservation (Cheyenne River Sioux, Colville, Gila River Indian Community, Mississippi Choctaw, Three Affiliated Tribes, Turtle Mountain Chippewa), and one reservation is not checkerboarded (Navajo); one of the tribes (Citizen Potawatomi), like most tribes in Oklahoma, has trust land but not a reservation. Before the Dawes Act, all the tribes in the study occupied lands that were ceded to or taken by the United States through treaties, executive orders, administrative decisions, or force of arms.
(15) The tribe, dissatisfied with the terms of the lease with Peabody and with "ex parte" communications between Interior officials and Peabody, has sued the Interior Department for breach of its trust responsibility.
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